Should I buy equity now?
Things that are clear. Tariffs are a reality. The global trade is in for a change.
But no one knows when will it be implemented.
The question though is who is going to bear the additional cost?
Buyer or Seller or split the cost among the two.
In all, this means companies in India that are export oriented are bound to see lower margins. We still don’t know if more business will come to India due to low tariff.
At this juncture, my idea is to clearly avoid export oriented sectors unless they offer significant risk reward.
The impact of tariff is expected to bring down our GDP by 0.2% - 0.5%.
With corporate earnings expected to slow down too and companies commentary being cautious, the downside on equity from here looks like 7%-10% and the upside is also around the same. So the risk reward to add new money is still not favourable.
Of course if it falls and makes a new recent low the tables turn. So be watchful of risk reward ratio and corporate earnings growth number.
I think you should add more long term debt with new money, more on it in the next post.