Indian Markets Await Potential Impact of US Tariff Decisions; Expert Warns of Small and Mid-Cap Overvaluation

Indian markets are closely monitoring the potential impact of upcoming US tariff decisions, particularly concerning key export sectors. While mild tariffs could benefit industries like pharmaceuticals and IT, significant impositions could disrupt export momentum and intensify price competition. India's electronics exports to the US were substantial in FY24, and a sectoral tariff differential could significantly affect this industry. Gems and jewelry exports also face considerable risk. The market is closely watching the tariff decisions, which could shape the market trajectory in the coming months. Veteran investor Prashant Jain has cautioned about overvaluation in the small and mid-cap segments of the Indian stock market. He estimates that a significant portion of stocks in this space remain overvalued. Jain suggests that large caps offer a better risk-reward profile. He also anticipates the Nifty to compound at a reasonable rate. The global implications of these events include potential trade wars and economic uncertainty due to tariff impositions, as well as a shift in investor sentiment towards large-cap stocks amid concerns about overvaluation in smaller segments.