The pause in tariffs by the US is a big positive, and now we see little chance of the draconian 2-Apr proposals seeing the light of day. We pivot on our market view and now expect a strong India equities rally with earnings bottoming out, moderate valuations, and global uncertainty substantially reduced. We turn positive on Technology and Materials, while retaining OW on Discretionary and Healthcare. We cut our Staples exposure to zero, and retain UW on Financials. Expect some volatility, though, as news on tariffs ebb and flow, but ignore the noise and buy into any consequent corrections. We retain our Nifty target at 26,000 for Mar-26E.
US tariff pause The 90-day pause on US tariffs is hugely positive. We believe this signifies that structural damage to the economy and financial markets is now a binding constraint for US trade policy. We expect a flood of bilateral treaties in this 3M interregnum, ultimately leading to a tariff regime that is only a little more autarchic than in the past. Consequently, this rules out a deep US recession, though a mild slowdown is still possible. Additionally, we do not anticipate any dislocation of global financial markets and expect commodity prices to bounce back sharply.