Let’s start with the elephant in the room: global markets have taken a beating with the imposition of tariffs by US and China also reciprocating in kind. Across geographies, investors are watching valuations tumble, driven by a once-in-a-generation reset of the world that was built on the tenets of globalisation. The world is now learning to live without the old comforts of globalisation. Supply chains are splintering, countries are turning inward, and cheap capital is no longer freely available. So, what does all this mean for the Indian economy, and more importantly, for your portfolio?
As per the Economic Survey 2024-25, India’s GDP growth is pegged at 6.3% to 6.8% for FY 2025-26. That’s slower than last year’s 8.2%, but in a world recalibrating to the end of globalisation, it’s still a strong showing. This isn’t a time to chase momentum. It’s a time to build conviction. Here are five ideas that can be also executed in your investment portfolios.
1. Tariffs is not necessarily all bad news
Trump tariffs are grabbing all the headlines, and sectors like gems, jewellery, IT, telecom equipment exports, pharma (tariffs to be announced) are taking a hit. However there are many sectors which could do well, provided the government acts fast to make ease-of-business a reality. Textiles, Automobile Ancillaries, Solar modules are some names that come to mind which can have a price advantage. Also substituting Chineses exports with Indian exports is a theme to explore.
2. The slowdown isn’t all bad news
A slower GDP doesn’t mean the economy is struggling. Like a runner pacing himself for a marathon. India is using this phase to realign priorities, focusing on long-term infrastructure creation while also nudging demand through targeted tax cuts and employment schemes. Fiscal discipline is holding up well too, with the Q2 FY25 deficit at 4.4% of GDP. This gives the government room to support growth if needed.
3. Look for where the resilience is coming from
The rural economy is doing surprisingly well, thanks to a decent monsoon and a healthy kharif crop. RBI expects inflation to moderate to around 4% for FY 2025-26. The RBI has recently reduced the interest rates by 25 basis points and revised its stance to Accommodate, which implies that further rate cuts can happen.
All of this is driving FMCG consumption and reducing dependency on schemes like MGNREGA. The services sector continues to shine, with insurance, and finance gaining steam. All of these are somewhat immune from the tariff storm that is blowing all over the world.
High-value manufacturing, especially electronics and chemicals, is also becoming a major export story, led by mid sized companies. Defence for both domestic and exports is another happening sector.
4. Private capex revival is the wildcard
The Economic Survey 2024-25 highlights that private sector investments need to accelerate if India aims to stay on course for the Viksit Bharat 2047 vision. This won’t happen unless the government makes bold moves in labour, land, and capital market reforms. Reforms aren’t just headlines, they’re signals that build confidence. India must be prepared for facing a glut of Chinese exports simply because China has built excess capacity which is under duress due to US tariffs.
5. How investors should play this cycle
Asset allocation becomes critical when markets turn. Use the Liquidity-Safety-Growth (LSG) framework, prioritise liquidity for near-term needs, safety through government and AAA+ bonds, and growth via equity investments. Within equities, focus on sectors with high domestic demand and strong pricing power. Let us not forget that global trade is unpredictable, thanks to geopolitics and friend-shoring. If shipping lanes are disrupted or input costs spike, Indian exports could suffer. As an investment advisor, I tell clients that risk can come from the unexpected. If you can’t track equities on your own, use a good portfolio management service (PMS) that follows disciplined strategies rather than chasing flavour-of-the-month stocks.
To sum up, the global reset is real. But India is not standing still. For long-term investors, this is a time to build positions in businesses that have both Roots (strong financials, ethical management) and Wings (growth track record + potential, market leadership). The Oracle of Omaha said, “Only when the tide goes out do you discover who’s been swimming naked.” The tide is already receding. This is the time to make sure your investments are wearing strong fundamentals.