Tariff tug-of-war clouds global outlook; stock pickers to lead the charge: Manishi Raychaudhuri

Time of India

11-07-2025

"Consumption,
private domestic consumption
, in some markets is being supported, is being boosted like in China, like in India. So, there are some of these themes which investors would have to cherry pick and within these themes the stocks, the companies that have assured growth and relatively better palatable valuations. And so, it will be a very interesting
stock pickers market
going forward," says
Manishi Raychaudhuri
, Veteran Investor In Asian Equities.
Confusion on the tariff front, it is quite strange, good but true that markets are holding on, why is that?
Manishi Raychaudhuri:
It is a phenomenon all across Asia. If you look at the Asian markets in the first half, they have moved up about 13% to 14%. They have climbed several walls of worry. It is a bit strange, no doubt, and I personally think that there is a degree of, I mean if I may use that word, complacence on the part of investors about the potential impact of tariffs and more broadly about the potential impact of policy uncertainty.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Design & Build Your Dream Office
Officebanao
Book Now
I mean, think about it, if you think today the tariffs on China are more than 50% and therefore you decide to relocate your supply chain, your manufacturing capacity into a low tariff jurisdiction, but tomorrow that the situation is reversed and tariffs in China decline and in the other country it increases, then in this kind of a scenario it is impossible for any manufacturer or any business to plan ahead and we have not yet seen the impact of that. So, my conclusion out of all this would be that okay we have seen a very good first half, the second half is where we have to tighten our bills and we have to brace for a more modest returns, maybe single digits, all across Asia, I am not singling out any market here.
Some themes are doing well. AI is again back in focus, particularly the likes of Nvidia and the entire AI supply chain. Consumption, private domestic consumption, in some markets is being supported, is being boosted like in China, like in India. So, there are some of these themes which investors would have to cherry pick and within these themes the stocks, the companies that have assured growth and relatively better palatable valuations. And so, it will be a very interesting stock pickers market going forward.
But it is always a stock pickers market, is not it? I mean, you always have to focus on individual businesses rather than macros or micros. So, my question is that what would be different because last one year it has been a stock pickers market only?
Manishi Raychaudhuri:
Well, I mean, if you simply put your money in an ETF based on MsCi Asia ex-Japan, this year you would have made pretty decent returns, in 2025 you would have made about 14% in US dollar terms and that is not bad returns by any means. So, even if you did not do stock picking, you put in in a low-cost index ETF, and an Asia-wide ETF, then well, you were quite okay. You would have been well off. But that situation I do not think would not last going forward. Some of the reasons I provided, I mean the market would have to sort of appreciate that there are some companies who would possibly ride through this period of uncertainty much better than others. There are the market leaders in each segment who would possibly have the ability to pass on cost increases and despite that retain their customers. So, those are the parameters that investors would have to look at.
Live Events
One thing is absolutely clear that Indian markets have made a peace with the contingent scenarios in the global front, but we cannot even negate the fact that we need a trigger, an economic indicative action to move ahead and yes,
earnings estimates
trajectory, currencies are a few triggers which can give that boost to the markets. Considering the earnings trajectory and remembering the operational updates which we have seen in past, what do you think how is the earning season going to pan out this time?
Manishi Raychaudhuri:
Now that is an interesting question because somewhat disappointingly in India we have seen earnings estimates decline right from last summer actually, from around August-September last year, and almost each and every sector has been a victim of this.
Earnings estimates have declined across sectors on a broad-based basis. In fact, if you look at whole of Asia, there are just two markets, Korea and Taiwan, which have seen earnings estimates increase in a sustainable manner.
Now, there is, of course, a kind of a point of view and I kind of partly tend to agree with that, that earnings estimate trajectory in India would bottom out in the second half of this year, possibly in the fourth quarter, and begin to move up driven by a few variables.
Number one, the additional cash that has been put in the hands of taxpayers and there are more coming as far as the government workers are concerned, that will begin to have an impact on urban consumption at some point of time. Number two, this jumbo rate cut from the Reserve Bank of India, the cut to CRR will begin to have an effect on liquidity and consumption and investments with a time lag. The monsoon seems to be good. Therefore, we do not have much of a concern about food inflation and even rural incomes.
So, I would think that those would be some of the triggers. When investors actually begin to see that earnings estimate upgrades are beginning to come through, that is when the market would begin to move up on a sustainable basis.
Before that what India is going through is a classic time correction which is actually not a bad outcome because the relative valuations in the process are correcting. Just see today, I mean, Hong Kong is up 1.4%, Taiwan is up 0.3% roughly I can see it on my screen here, and India is just about flattish to 0.2-0.3% down which is that same classic time correction which is happening and that is a good outcome because the relative valuations are correcting. If it goes on for somewhat longer, the valuations would again begin to look attractive to the foreign institution investors.