Expert view: Varun Goel, Senior Fund Manager at Mirae Asset Investment Managers (India), shares his insights on the impact of the Trump tariffs, India’s economic outlook, and investment strategies amid global uncertainty. From small-cap opportunities to FMCG trends and the growing interest in US equities, he explains where the markets are headed and how investors should navigate the road ahead. Edited excerpts:
The talk of the town is the Trump tariff. Against this backdrop, should investors stick to index-based investing or adopt a stock-specific approach?
As far as the tariffs imposed by the US government are concerned, it’s a fluid situation. We don’t yet know how it will evolve. As things stand today, there’s a 50% tariff on almost $50 billion worth of exports. Whether this number stays or comes down — we don’t know. My hope is that, with implementation, this number can be scaled down to levels similar to what our peers in South Asia and Southeast Asia are paying. That’s the hope.
Of course, as things stand today, sectors like textiles, leather, and shrimps will be impacted. The tariffs are fairly prohibitive, making these exports uncompetitive. One hopes and fears that the government is planning some relief measures. These are sectors employing a large number of people, so their interests will also need to be protected. There’s talk of central government schemes or incentives coming in.
Now, in terms of broader investment, I don’t think this should affect long-term asset allocation. Equity investing is usually done from a medium to long-term perspective, based on risk-return, investment goals, and ability to handle drawdowns. This tariff situation should not dictate investment strategy.
Are you suggesting that investors should think medium to long-term and not let the tariff noise impact decisions?
Yes, absolutely. Like I said, one hopes it will get resolved in a few months. If you take a 3-5 year view on India, we expect consistent economic growth, and on that back, good corporate earnings. Our medium-term outlook for Indian equities remains constructive. In the short term, yes, there may be turbulence — we don’t know — but we hope the government will resolve it soon.
The government has introduced some GST reforms. India has signed FTAs with countries like the UK, and there are talks of potential treaties with China. Do you think such measures can help offset the tariff impact from the US?
We have to look at the overall picture. Over the past six months, the government has recognised a consumption slowdown and taken steps to address it.
First, there was the direct tax cut in the Union Budget, amounting to around ₹1 lakh crore. Then there’s the much-discussed GST rate cut. Next is the upcoming Pay Commission — we expect implementation in 18-24 months, which will also boost both staples and discretionary consumption. Add to this the reduction in interest rates — auto loans, mortgages, everything has become cheaper.
All in all, we believe FY26 will be a year of economic recovery. With 100 bps of rate cuts and ₹1.5–2 lakh crore of total stimulus through direct taxes and GST cuts, RBI and the central government have done a fair bit. So yes, we’re hopeful consumption will pick up in the coming fiscal.
FMCG has satyed on the back foot for some time. Once considered market darlings — HUL, Asian Paints — they haven’t really performed. Can these measures trigger fresh buying in FMCG?
Over the last 2-3 years, FMCG faced three challenges:
Valuations — They were on the higher side;
Rural slowdown and inflation — Commodity prices like crude oil, palm oil, and agri inputs went up. Consumers started downgrading to cheaper, regional brands;
Direct-to-consumer (D2C) brands — These gained traction via e-commerce. While small, they’re eating into the growth of larger brands.
We believe the cyclical slowdown in rural consumption and inflation will reverse. So yes, FMCG and consumer durables should do well. But the structural issue from D2C brands via e-commerce is here to stay and will have a differentiated impact across categories — important to keep that in mind while stock-picking.
While mid-caps did well in Q1 and large-caps surprised, small-cap earnings remain elusive. But the index has still seen a decent jump over six months. What should be the strategy now?
Small caps remain an attractive space for long-term investors — five years or more. Over the past 20 years, the Nifty Smallcap 50, 150, and 250 indices have delivered around 16–17% IRR. So historically, it’s a strong space.
We don’t see the next 10 years being very different. Of course, small caps are volatile — corrections of 20–30% can happen. For example, between September 2024 and April 2025, we saw a 26% correction. But since then, the space has bounced back.
We launched a small-cap fund in January and believe it’s well-suited for long-term goals — retirement, children’s education, home upgrades, etc. Yes, it comes with volatility and, currently, some froth in pockets — so stock selection is key. But overall, the space remains attractive.
Could you share your equity market outlook? Can Sensex hit 1 lakh anytime soon?
Last year, the market gave 3–4% returns. This year, with tax and interest rate cuts, we expect the earnings cycle to complete and Nifty universe to deliver 10–11% earnings growth. Over the long term, market returns tend to mirror earnings growth. So we expect 10–12% compounding over the next 2–3 years.
As for the Sensex hitting 1 lakh — if you look back, in 2014 we were at 25,000. We’ve come a long way. As India’s growth story continues and corporate earnings grow, markets will reflect that.
So yes, with good stock selection and risk management, fund managers may outperform. But base-case expectations are 10–12% compounding.
We’re seeing increased interest among Indian investors in US equities. Does it make sense for retail investors to invest in US markets now?
The US economy has slowed a bit, but is still growing at 1.5–2%, which is decent for them. There’s also an expectation that the Fed will start cutting interest rates soon — maybe as early as this month. If that happens, it will boost the economy.
Yes, tariffs will have a negative impact. The interaction between rate cuts and tariffs will be key. But overall, US markets have done well, driven by the tech boom.
We’re now at the cusp of a major tech transformation — AI is the next big thing, and US companies are leading that effort with massive investments. It’s difficult to say how it will all play out, but we’re watching closely.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
