# trump tariffs, market reactions, gold surge & india's tech advantage

what matters now

Markets are rebounding after Trump's strategic tariff exemptions for electronics eased global tensions, though with warnings of semiconductor tariffs on the horizon. Gold prices reached all-time highs as investors seek safe havens amid economic uncertainty. India stands to benefit from a 20% tariff advantage over China in tech exports to the U.S. Bank earnings season begins with expectations of margin compression. The RBI reduced its FY25 GDP forecast to 6.3% but raised next year's outlook to 6.5%, signaling confidence in India's growth trajectory despite global headwinds.

Trump's tariff chess: electronics exempted, semiconductors in crosshairs

The global market panic triggered by Trump's "reciprocal tariffs" found temporary relief after the U.S. administration exempted smartphones, computers, and other electronics from new duties. This calculated move, which Trump insisted wasn't an "exemption" but rather moving products to "a different tariff bucket," sparked an immediate rally across Asian markets, with Japan's Nikkei jumping 2%, Hong Kong's Hang Seng up 2.4%, and European indices rising around 2%.

Behind this apparent concession lurks a more strategic approach to the trade war. Trump and Commerce Secretary Howard Lutnick quickly dampened optimism by announcing that semiconductor tariffs are coming "in the next month or two," with pharmaceuticals also in the crosshairs. This sectoral approach suggests a more sophisticated targeting of Chinese industries rather than the blunt instrument approach initially feared.

The immediate market reaction reflects both relief and continued uncertainty. U.S. equity futures pointed higher, with Nasdaq futures gaining 1.8% as tech giants like Apple saw their shares rise over 6% in early trading. The dollar, however, continued its decline against major currencies, hitting a six-month low against the yen as investors reassess the greenback's status as the global reserve currency.

For companies like Apple, which relies heavily on Chinese manufacturing, the exemption provides breathing room. But the threatened semiconductor tariffs create a new horizon of uncertainty, especially as Trump emphasized that "we are taking a look at semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN." This calculated approach of relief followed by targeted pressure appears designed to maximize U.S. leverage in ongoing negotiations with China and other trading partners.

Gold surges to record highs as investors seek safe haven

Gold prices have rocketed to unprecedented levels, touching an all-time high of $3,245 per ounce as investors flee to safety amid growing global economic uncertainty. The precious metal has surged over 23% in 2025 alone, reflecting a fundamental shift in investor sentiment regarding traditional safe havens.

Goldman Sachs has dramatically raised its year-end gold price target to $3,700, a substantial increase from its previous forecast of $3,300. The investment bank cites two primary drivers: substantially stronger central bank demand (now averaging 80 tonnes monthly compared to pre-2022 levels of just 17 tonnes) and mounting recession risks in the U.S., which Goldman estimates at 45% probability within the next year.

The surge represents more than just a reaction to immediate market volatility. It signals a deeper reassessment of what constitutes a reliable store of value in today's economic landscape. As S. Naren of ICICI Prudential Asset Management noted, "The safe haven used to be U.S. Treasury and dollar, now it's gold." This shift away from traditional financial safe havens toward physical assets reflects eroding confidence in central banks' ability to navigate growing economic challenges.

Goldman's analysis suggests even higher potential prices – up to $3,880 if a recession materializes and drives ETF inflows similar to pandemic levels, or $3,810 if central bank buying accelerates to 100 tonnes monthly. The only scenario limiting gold's ascent would be unexpectedly robust economic growth.

For investors building portfolios in FY26, financial experts now recommend allocating at least 10% to gold as a hedge against inflation and geopolitical risks. The metal's appeal has only strengthened in the low-interest-rate environment, particularly as China's demand has surged, driving premiums above global spot prices as consumers seek protection from trade war impacts.

India's competitive edge: 20% tariff advantage over China in tech exports

India has emerged with a significant advantage in the reshaping global trade landscape, securing a 20% cost advantage over China for electronics exports to the U.S. following Trump's tariff exemptions. While the U.S. has paused the new 26% "reciprocal tariff" on Indian goods for 90 days to allow for negotiations, Chinese products still face the existing 20% tariff, creating a substantial competitive edge for Indian manufacturers.

The Indian Cellular and Electronics Association highlighted that India and Vietnam now enjoy zero tariffs on smartphones, tablets, and laptops exported to the U.S., while Chinese competitors remain handicapped by the 20% duty. This advantage comes at a particularly opportune moment, as India's mobile phone exports reached a record ₹2 lakh crore in FY25, a 55% increase from the previous year, with iPhone exports alone accounting for approximately ₹1.5 lakh crore.

For India's tech manufacturing ecosystem, this represents a genuine opportunity to accelerate market share gains. The U.S. imports over $250 billion of smartphones and computing devices annually, with China supplying about 30% ($75 billion) and India currently capturing just 5% ($12 billion). The tariff advantage could help India significantly increase this share, especially as global tech companies look to diversify supply chains away from China.

Beyond the immediate advantage, this situation positions India to potentially become a key player in the broader semiconductor and electronics ecosystem. Industry experts suggest India could become instrumental in outsourced semiconductor assembly, testing, and fabrication (ATMP/OSAT), printed circuit boards, and critical mineral processing – areas where U.S. companies are actively seeking alternatives to Chinese suppliers.

However, analysts like Jigar Mistry from Buoyant Capital caution that this advantage comes with risks. China may attempt to flood other markets, including India, with products that can no longer compete effectively in the U.S., potentially disrupting domestic industries through aggressive pricing – a pattern seen previously during steel market disruptions in 2015-2018.

Banks brace for Q4 earnings pressure from margin compression

India's banking sector is heading into Q4 earnings season with expectations of muted growth and significant margin pressure. Analysts project minimal earnings expansion of just 0.5% year-on-year across a universe of 18 banks, with some projections even indicating a 7% decline for nine closely monitored institutions.

The primary concern has shifted to net interest margin (NIM) compression, with expectations of a 10-15 basis point reduction in March as recent policy rate cuts begin affecting a substantial portion of advances. This pressure comes amid slowing credit growth, which has decreased to 11% from 16.4% last year, while deposit growth continues to lag behind.

HDFC Bank's recent decision to cut its savings account interest rate by 25 basis points to 2.75% – the lowest among private sector banks – signals the growing urgency to manage funding costs in this challenging environment. The move positions HDFC Bank's rate closer to public sector competitors like SBI and PNB, which offer a minimum of 2.70%. With an elevated credit-to-deposit ratio exceeding 100% post-merger, HDFC Bank is clearly focused on optimizing its cost structure.

Looking at individual bank performances, State Bank of India may see profit decrease by 10-20% year-on-year as provisioning normalizes, while HDFC Bank is expected to deliver modest growth of approximately 5% in profit after tax while maintaining strict loan-to-deposit ratio discipline. ICICI Bank stands out with projected PAT growth of 12%, though even it faces margin headwinds.

Public sector banks may be better positioned in this environment, with only 45% of their loans linked to external benchmarks compared to 86% for private banks, making them less vulnerable to immediate NIM compression during rate adjustments. PSBs are also likely to benefit from non-interest income, particularly treasury gains as government bond yields drop, potentially approaching ₹4,000 crore.

Dr. Reddy's aggressive cost-cutting targets 25% wage bill reduction

Dr. Reddy's Laboratories has embarked on a dramatic cost-cutting initiative aimed at reducing its wage bill by 25%, primarily targeting high-paid employees earning over ₹1 crore annually. The pharmaceutical giant is offering voluntary retirement to employees aged 50-55 within its Research & Development division while also requesting resignations from several senior executives across various departments.

The aggressive downsizing comes in response to underperformance in new ventures, including a joint nutraceuticals initiative with Nestle and digital therapeutics efforts. The restructuring could affect 300-400 employees and potentially lead to the closure of the therapeutics division entirely. The financial implications are substantial, with annual savings projected at approximately ₹1,300 crore against the company's current employee benefits expenses of ₹1,367 crore for Q3 FY25.

This move marks a stark contrast with the company's previous growth trajectory. In FY23, Dr. Reddy's added 6,281 new hires and made significant investments in training and development, indicating a substantial strategic pivot in response to recent market challenges and venture underperformance.

The pharmaceutical sector has been under pressure globally, with increasing competition in generics, price erosion in key markets, and rising R&D costs for new drug development. Dr. Reddy's appears to be taking preemptive action to streamline operations and focus on its core strengths amid these industry-wide headwinds.

This restructuring reflects a broader trend across pharmaceutical companies worldwide, as they balance innovation investments against operational efficiency in an increasingly competitive landscape. The outcome of this dramatic pivot will likely influence similar decisions across the Indian pharmaceutical sector.

Investor wisdom: Devina Mehra's nine mantras & Lynch's market panic rules

Amid market volatility, two investment frameworks have emerged to guide investor decision-making: Devina Mehra's nine "Navratnas" from her new book and Peter Lynch's time-tested strategies for navigating market panic.

Mehra, a prominent PMS fund manager, presents a fresh perspective with principles that counter typical investment tropes. Her first mantra, "Be the House, Not the Gambler," emphasizes portfolio diversification instead of concentration. She advises investors to "Play for Singles, Not Sixes," advocating steady, incremental gains rather than chasing high-risk multibaggers. Perhaps most resonant in today's data-rich environment is her call for "No Storification. Just Datafication," urging reliance on quantitative analysis rather than narratives surrounding stocks.

Her approach is complemented by mantras like "Be Hare-ish, Not Bullish or Bearish," promoting agility in strategy, and "Rigidity Kills—in Arteries and Investing," emphasizing adaptability to changing market conditions. Together, these principles offer a framework that values disciplined, emotionally detached investing over speculative plays or rigid ideologies.

Parallel to Mehra's wisdom, Peter Lynch's classic strategies have resurfaced amid the market turmoil triggered by tariff shocks and bond market upheavals. Lynch's approach centers on five key questions, beginning with "What do you own—and why do you own it?" This focuses investors on understanding the businesses behind their investments to prevent panic-selling during volatility. His follow-up questions—"Do your holdings match your risk profile?" and "Why do you own stocks in the first place?"—remind investors of their original rationale and risk tolerance.

Perhaps Lynch's most powerful tool for navigating market panic is the question "What has changed?" This helps differentiate between meaningful fundamental shifts and mere reactions to headlines. His final test—"Would you buy it today?"—serves as a reality check for existing positions, encouraging decisions based on current conditions rather than historical performance.

Both frameworks offer complementary wisdom: Mehra's mantras provide a strategic compass for building a resilient portfolio, while Lynch's questions offer tactical guidance during moments of market stress. Together, they remind investors that successful investing is as much about managing one's psychology as it is about selecting the right assets.

RBI's dividend windfall: ₹2.5+ lakh crore expected for FY25

The Reserve Bank of India is poised to deliver an unprecedented dividend to the central government, with economists projecting a surplus transfer exceeding ₹2.5 lakh crore for fiscal year 2025. This represents a significant increase over last year's already substantial payout of ₹2.1 lakh crore, with some analysts suggesting the final figure could reach between ₹2.8 to 3.5 lakh crore.

This windfall stems from two primary factors: the RBI's record-high dollar sales aimed at stabilizing the rupee, and substantial interest income accrued from extensive liquidity operations. The timing is particularly fortuitous for the government, providing a crucial fiscal buffer amid predictions of slowing tax collections and increased borrowing needs.

The anticipated dividend will inject significant liquidity into the banking system, likely benefiting the bond market by lowering yields, particularly on shorter-tenured bonds. This enhanced liquidity could prove instrumental as the government navigates the uncertain economic landscape shaped by global trade tensions and domestic growth considerations.

For context, this projected dividend would represent one of the largest transfers from the central bank to the government in India's history, reflecting both the scale of the RBI's financial operations and the unique monetary conditions of the past year. The official announcement regarding the allocation of the surplus funds is expected by late May, marking a pivotal moment for India's fiscal planning in FY26.

PL Capital's bullish forecast: Nifty could hit 27,590

Prabhudas Lilladher Capital maintains an optimistic long-term outlook for Indian equities despite near-term headwinds, projecting a bull case target for the Nifty at 27,590 – an upward revision from their previous forecast of 27,041. Their base case target has been slightly adjusted lower to 25,521 from 25,689, reflecting caution amid current global and domestic macroeconomic pressures.

The firm's analysis suggests current valuations place the Nifty at a 7.5% discount to its 15-year average P/E ratio of 18.9x, creating a potential springboard for appreciation if market conditions improve. Their bull case assumes a return to historical average valuations with an FY27 EPS estimate of ₹1,460, while the bear case foresees a target of 24,831 if pessimistic scenarios materialize.

PL Capital recommends strategic overweight positions in banks, healthcare, consumer goods, telecommunications, and capital goods sectors. Their model portfolio emphasizes stocks like ICICI Bank, Kotak Mahindra Bank, ITC, Bharat Electronics, and Bharti Airtel, alongside additions like Apollo Hospitals, Pidilite Industries, and Eicher Motors.

For small and mid-cap exposure, the firm identifies 11 potential high-return stocks including Aster DM Healthcare, Astral Ltd., Chalet Hotels, and Kaynes Technology India, all characterized by strong financial fundamentals and significant sectoral prospects.

Despite ongoing challenges including geopolitical tensions, weakening domestic demand, and earnings downgrades in several sectors, PL Capital's outlook encapsulates cautious optimism for the Indian equity market's long-term potential, appealing to investors seeking reliable growth opportunities within the current landscape.

quick snippets

• Economic Outlook: RBI has reduced its GDP growth forecast for FY25 from 6.5% to 6.3%, while raising FY26 projections from 6.2% to 6.5%, signaling confidence in medium-term prospects despite near-term challenges.

• Market Holiday: Indian stock markets were closed on April 14 for Ambedkar Jayanti, providing traders a respite amid recent volatility. Markets will also be closed on April 18 for Good Friday, resulting in a shortened trading week.

• Corporate Updates:

- Info Edge announced a 1:5 stock split with May 7 set as the record date, aiming to enhance liquidity and broaden investor access. This marks the company's first-ever stock split.

- Nidhi Kaistha appointed as Head of Lamborghini India, bringing over 25 years of experience across hospitality, aviation, and automotive sectors to this strategic role.

- Mazagon Dock Shipbuilders aims to execute orders worth ₹10,000 crore in FY26, targeting expansion in both defense and commercial sectors with current order book at ₹33,000 crore.

• Earnings Calendar: Major companies reporting Q4 results this week include HDFC Bank, ICICI Bank, Yes Bank, and Infosys, providing crucial insights into financial sector health and technology services outlook.

• Breaking News: Fugitive diamond merchant Mehul Choksi, accused in the ₹13,850 crore PNB scam, has been detained in Belgium following India's extradition request, marking a significant development in the ongoing legal proceedings.

• Investments to Watch: Investment experts favor low-beta stocks as defensive plays amid market volatility, with FMCG and healthcare sectors showing particular resilience. Companies like Hindustan Unilever, ITC, Sun Pharma, and Apollo Hospitals have outperformed broader indices during recent turbulence.