Axis Securities has advised investors to increase their cash holdings by up to 10% in the short term due to market volatility following the U.S. President Donald Trump’s imposition of a 26% tariff on Indian imports. The brokerage recommended deploying funds selectively during market downturns, focusing on high-quality stocks with strong earnings visibility over the next 12 to 18 months.
In their latest investment strategy report, Axis Securities expressed a preference for large-cap private banks, telecom, consumption, hospitals, and interest-rate proxies. Their top picks include HDFC Bank, ICICI Bank, State Bank of India, Bharti Airtel, Trent Ltd, Hero MotoCorp, Max Healthcare, Indian Hotels, Kalpataru Projects, APL Apollo Tubes, Varun Beverages, Prestige Estates, and Cholamandalam Investment and Finance.
The brokerage expects the pharmaceutical sector, which is exempt from the new U.S. tariffs, to benefit in the near term. It noted that Indian drugmakers experienced gains, driven by the relief that the country’s largest export category to the U.S. is not affected by the tariffs.
Despite the tariff shock, Axis Securities believes India is relatively insulated compared to other affected countries, such as China, Vietnam, and Taiwan, which face steeper levies. The brokerage suggests that domestic-facing sectors are more favorable due to minimal impact from reciprocal tariffs, while export-oriented sectors should adopt a wait-and-watch approach.
Axis Securities downgraded the IT sector, warning that a slowdown in U.S. spending, combined with the tariff impact, could pressure earnings and valuations. The brokerage recommended reducing positions in the IT sector due to the increased likelihood of downgrades following the tariff announcement.
Looking forward, Axis Securities highlights domestic tailwinds, including recent Reserve Bank of India policy decisions and government-led consumption boosts, as factors that could support market stability in FY26. However, it remains cautious regarding global risks, particularly the potential for a slowdown in the U.S. economy.
(Note: Recommendations, suggestions, views, and opinions provided by the experts are their own and do not represent the views of the Economic Times.)
