Stocks to Buy | Navigating Market Uncertainty: Ajay Bagga on Tariffs, Sectors & Strategy
1/11
Tariff tensions rising
Ajay Bagga in an interview to ET Now highlights growing concerns in global markets as Donald Trump hints at a blanket 10% tariff, with steeper duties on Chinese imports. Bagga warns that the temporary tariff suspension with the EU, set to expire in early July, could reignite trade conflicts and dampen investor confidence.
2/11
Rejigging business models
According to Ajay Bagga, companies are being forced to adapt their operations to the new tariff regime. He points out that while Apple’s decision to manufacture the Mac Pro in Austin is symbolic, high U.S. labor costs make large-scale reshoring unviable. Bagga believes Trump may selectively offer trade relief where it aligns with U.S. interests.
3/11
Tariffs will change, not China
Ajay Bagga asserts that despite rising tariffs, China remains indispensable to the global supply chain. He notes that China has become the top trading partner for over 70% of nations. India’s $100 billion trade deficit with China, Bagga adds, underscores the persistent reliance on Chinese goods across global markets.
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4/11
Markets brace for early July
Ajay Bagga anticipates a market correction as the July 9 deadline for tariff decisions approaches. He explains that while some side deals are likely with countries like Japan, Vietnam, and India, the overarching uncertainty could weigh on market sentiment in the near term.
5/11
Sectoral impact – Resilient plays
Ajay Bagga identifies defensives such as pharmaceuticals, FMCG, and utilities as likely outperformers amid global volatility. He sees particular promise in pharma, especially if India strikes a beneficial deal with the U.S. At the same time, Bagga believes financials and industrials remain strong long-term plays due to their structural advantages.
6/11
Rural boost from monsoon
Ajay Bagga points to early and above-normal monsoons as a catalyst for rural demand recovery. He cites a 23% year-on-year rise in tractor sales as evidence of a rural pickup. With favorable reservoir and soil conditions, Bagga expects kharif sowing to fuel consumption in smaller towns and villages.
7/11
Fiscal & monetary stimulus outlook
Ajay Bagga notes that both fiscal and monetary policies are aligned to support growth. He expects the RBI to cut rates by 25–50 basis points in its June 6 policy meeting. Bagga also highlights over ₹8 lakh crore in systemic liquidity since December, along with government-led measures like PLI schemes and tax incentives to boost demand.
8/11
Weak dollar = Stronger RBI hand
Ajay Bagga explains that a projected U.S. GDP slowdown, from 2.5% to 0.5%, is leading to a softer dollar. This, he says, gives the Reserve Bank of India room to lower rates without destabilizing the rupee. Bagga views this as an encouraging sign for a more dovish monetary stance.
9/11
Nifty outlook
Ajay Bagga remains bullish on Indian equities, projecting new all-time highs for the Nifty by December. He expects FY26 EPS to reach 1230, and FY27 to rise to 1360–1380. Even at a forward P/E of 18, Bagga believes the market offers compelling value, with the current consolidation phase seen as a healthy pause.
10/11
Geopolitical watchpoints
Ajay Bagga warns that while the market has largely priced in the Russia-Ukraine conflict, new flashpoints such as Iran-Israel tensions could create fresh volatility. He sees the China-Taiwan standoff as a long-term concern, but not an immediate threat, keeping investors on edge.
11/11
Market strategy summary
Ajay Bagga advocates a balanced and agile investment strategy in today’s unpredictable environment. He urges investors to stay diversified, focus on quality and reasonable valuations, and periodically realign portfolios every one to three years. Bagga cautions against chasing overvalued stocks or speculative narratives.