1 week ago
Global tariff tensions have rattled markets, but Pankaj Tibrewal, Founder and CIO of IKIGAI Asset Manager, believes this shake-up could create a sweet spot for some sectors in India.
While investors are rushing to reassess their portfolios, Tibrewal is staying put on pharma and keeping a close eye on chemicals for fresh upside.
Tibrewal dismissed fears that US tariffs would hurt Indian generic drugmakers. “If he tries to touch generic pharmaceuticals, it will be completely suicidal for the US healthcare,” he said, referring to US President Donald Trump’s comments on bringing pharma manufacturing back to the US.
Also Read: UBS sees risks to the pharma sector amid tariff heat
Indian companies supply 60% of the generics used in the US, which make up 90% of volumes there. “Margins are not so great that they can absorb this tariff increase,” he said, adding that such a move could lead to shortages and price spikes in essential drugs.
In contrast to large multinational drugmakers that can move operations, Indian generic firms do not have the financial muscle to shift manufacturing to the US. “The Indian generic companies don’t have a balance sheet of more than $8–10 billion to spend on capex in the US,” Tibrewal said.
"In my view, going by logic, he should not touch the generic pharmaceutical. What he's meaning is the Big Pharma, where he wants the manufacturing to come back to the US. So, my belief is that once that does settle down, India pharmaceutical industry is actually in a better and a sweet spot, and especially the CDMO players," he added.
While IT and pharma have so far been spared from direct tariff impact, he currently prefers pharma over IT in the near term.
Also Read: Jefferies cuts target of IT stocks by up to 35%
Tibrewal expects discretionary IT spending to take a hit as global uncertainty grows, with companies pulling back on non-essential projects. He expects most IT firms may refrain from offering full-year guidance.
Tibrewal remains bullish on chemicals despite recent volatility. He believes India is well-positioned to gain market share as global companies look for alternatives to China.
He sees solid earnings potential in the space. “Many of these companies are so well positioned and have a low base coming in that this year we should see a 20–25% growth,” Tibrewal said. He added that India’s latest export data already shows strong growth from chemical firms.
Also Read: Indian chemical makers expect export boost
"China is an important piece across different commodities. And if China decides not to export or supply, the world will have problems. In many commodities, you could see inflation coming back very significantly. And if it happens in chemicals also, it could be good news for Indian manufacturers," he added.
More broadly, Tibrewal advised sticking to domestic-facing sectors like banking, NBFCs, capital goods and consumption in the current environment. He believes market conditions will favour stock pickers who focus on quality companies with strong franchises.
“There is nervousness across the Street… but we should get good bargains,” he said.
He also flagged a growing divergence in the market between index performance and broader stock movement. “In Q4, the NSE 500 index return was –6.5%, but the median return of stocks was –12.5%. That gap shows how narrow the market has become,” he pointed out.
Also Read: Motilal Oswal sees 10-12% market returns this year
Going ahead, he expects a more bottom-up approach to investing will work best. “This will be a stock pickers’ market. The easy money era is over,” he said.
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