{"id":36813,"date":"2025-04-05T08:10:04","date_gmt":"2025-04-05T02:40:04","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=36813"},"modified":"2025-04-05T08:12:16","modified_gmt":"2025-04-05T02:42:16","slug":"the-weekly-wrap-brace-for-impact","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/the-weekly-wrap-brace-for-impact\/","title":{"rendered":"The Weekly Wrap | Brace for Impact"},"content":{"rendered":"

In this edition, we talk about the \u2018reciprocal tariffs\u2019 that US President Donald Trump has imposed on all countries and how it could affect the global economy. We also talk about Haldiram\u2019s getting new investors on board, BlackRock CEO\u2019s advice on asset allocation, and the RBI\u2019s latest measures to boost banking system liquidity.<\/p>\n

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Welcome to Kuvera\u2019s weekly digest on the most critical developments related to business, finance, and the markets.<\/span><\/i><\/p>\n

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tl;dr<\/strong>\u00a0Hear the article in brief instead?<\/p>\n

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\u201cMaverick, it\u2019s not your flying, it\u2019s your attitude,\u201d Lieutenant Tom \u2018Iceman\u2019 Kazansky told Lieutenant Pete \u2018Maverick\u2019 Mitchell after a practice mission. \u201cThe enemy\u2019s dangerous, but right now you\u2019re worse. Dangerous and foolish.\u201d<\/span><\/p>\n

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The year was 1986 and Iceman and Maverick were young, cocky, 20-something navy pilots flying the state-of-the-art F-14A Tomcat fighter jets aboard the USS Enterprise aircraft carrier.<\/span><\/p>\n

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If you still haven\u2019t guessed it yet, we are talking about the original Top Gun movie that went on to become a cult classic and established Tom \u2018Maverick\u2019 Cruise and Val \u2018Iceman\u2019 Kilmer, who died this week after a long battle with cancer.<\/span><\/p>\n

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But we aren\u2019t really talking about a movie. After all, this is a newsletter that tracks the world of business and economics.\u00a0<\/span><\/p>\n

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So, what are we really talking about? Well, imagine Donald Trump as Tom Cruise in that movie. Okay, we know, it is difficult. But try for once. Now, how many adjectives that Iceman used to describe Maverick do you think fit Trump, too?<\/span><\/p>\n

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We are being harsh, some of you might say. And maybe we are being so. But what Trump did this week is actually being described in similar terms across the world. Here\u2019s a quick recap of what he did.<\/span><\/p>\n

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The US President announced what he called \u201creciprocal tariffs\u201d on all of America\u2019s trading partners. All goods imported into the US from any country now carry a 10% baseline tariff and additional tariffs ranging from 10% to 50%.<\/span><\/p>\n

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Trump slapped a 20% tariff on the European Union, 24% on Japan, 25% on South Korea, 34% on China, 26% on India, 32% on Taiwan, 36% on Thailand and 46% on Vietnam. These tariffs are in addition to the ones he levied previously since taking office in January. But some goods, such as semiconductors and pharmaceuticals, are exempt, at least for now.<\/span><\/p>\n

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Essentially, Trump overturned nearly a century-old global trading system that is widely believed to have boosted economic growth worldwide and may have even helped maintain a fragile peace after the two world wars.<\/span><\/p>\n

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Trump and his administration believe that the sweeping tariffs will prompt both American and non-American companies to set up or expand their manufacturing capacities in the US, force its trading partners to cut their tariffs on American goods and import more from the US, and reduce the country\u2019s $1.2 trillion trade deficit.<\/span><\/p>\n

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If things work out the way he wants, that may well happen. If only things were so simple.\u00a0<\/span><\/p>\n

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As expected, the reaction from America\u2019s trading partners was swift and strong. Canada, which was exempted from reciprocal tariff but was hit by some other blanket tariffs, fired the first shot. Canadian PM Mark Carney announced 25% tariffs on US auto imports and promised more steps. China, which has the biggest trade surplus with the US, called it \u201ctypical bullying\u201d and vowed to take countermeasures. Ursula von der Leyen, head of the EU\u2019s executive arm, said that this was \u201ca major blow\u201d to the world economy and that the EU will respond.<\/span><\/p>\n

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Economists and analysts also expressed shock at the higher-than-expected tariffs and worried about their impact on inflation, growth and jobs, not just in the US but also in all other countries. One market strategist told CNN it was the \u201cpolicymaking equivalent of a suicide bomber\u201d.\u00a0 The Economist said the \u201cmindless tariffs will cause economic havoc\u201d.<\/span><\/p>\n

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Indeed, almost everything in the US will get costlier, from toys, shoes and clothes to cars and Apple iPhones. Recession fears have mounted and US stocks plunged by the most in five years on Thursday, with the tech-heavy Nasdaq sinking 6%. Stock markets across Europe and Asia, slumped as well. Crude oil, dollar and gold declined, too.<\/span><\/p>\n

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How will it affect India? It\u2019s a bit early to say definitively, but sectors such as gems and jewellery and auto components will be hurt while pharma companies will breathe a sigh of relief for now. The government says it is evaluating the impact and is in talks with the US for a trade deal. But make no mistake, India can\u2019t completely escape the fallout if the entire world economy goes into a tailspin. So, tighten your seatbelt, check your parachute, and be prepared for turbulence!<\/span><\/p>\n

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Bhujia Makes It Big<\/h3>\n

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While many Indian companies and their owners and shareholders would be busy analyzing the effect of US tariffs on their businesses and portfolios, at least one company is sitting pretty and counting its cash. That company is Haldiram\u2019s.<\/span><\/p>\n

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The snack company famous for its bhujia has picked up multi-million-dollar cheques from three international investors. These investors are Singapore government-owned firm Temasek, Abu Dhabi\u2019s International Holding Company, and US-headquartered private investment firm Alpha Wave Global.<\/span><\/p>\n

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Temasek bought a 10% stake for about $1 billion in Haldiram\u2019s, which was founded in Bikaner in 1937 and is now one of India\u2019s biggest food companies. While it didn\u2019t disclose the amount it raised from IHC and Alpha Wave, the transaction valued it at $10 billion, or about Rs 85,000 crore. For perspective, that valuation can give it an entry into the Nifty 50.<\/span><\/p>\n

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The deals came after several years of negotiations that Haldiram\u2019s promoters held with several companies. In fact, as far back as 2019, the US breakfast cereals giant Kellogg\u2019s was said to be in talks to buy a stake in Haldiram\u2019s.\u00a0<\/span><\/p>\n

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Many foreign investors, attracted by the company\u2019s growing business and dominating presence in the Indian snacking and restaurant markets, wanted to buy a majority stake. Issues such as trademark and branding tussles among various branches of the Agarwal family that own Haldiram\u2019s businesses in different regions made it a tough task.\u00a0<\/span><\/p>\n

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Moreover, the company\u2019s promoters didn\u2019t want to lose control. So, the sale of minority stakes to the three investors fits in with their strategies. The investments will help the company to not only strengthen its presence in India but also expand in overseas markets such as the US and the Middle East. That may also help it avoid Trump\u2019s tariffs!<\/span><\/p>\n

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Tweak the Portfolio<\/h3>\n

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How does one invest in such uncertain times? Most market advisers would say don\u2019t worry about short-term developments, stay focused on your long-term goals, and stick to your asset allocation strategies. And few would disagree with this advice. But what if the asset allocation itself needs change?\u00a0<\/span><\/p>\n

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Larry Fink, the CEO of the world\u2019s biggest asset management company BlackRock, suggests exactly that.\u00a0<\/span><\/p>\n

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In his annual letter to BlackRock\u2019s clients this week, Fink recommended tweaking the classic formula that suggests investing 60% into stocks and 40% into fixed income. \u201cThe future standard portfolio may look more like 50\/30\/20 \u2014 stocks, bonds, and private assets like real estate, infrastructure, and private credit,\u201d he wrote.<\/span><\/p>\n

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For years, the 60\/40 portfolio has been the standard for long-term investment portfolios\u2014of course, with tweaks depending on several parameters such as age, goals, and risk appetite. Fink is now suggesting that investors put 50% into stocks, 30% into debt, and 20% in unlisted assets like property and alternative investments.<\/span><\/p>\n

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Fink\u2019s basic premise is that investors need to diversify beyond stocks and bonds, although he himself added a note of caution. \u201cWhile these private assets may carry greater risk, they also provide great benefits,\u201d he wrote.<\/span><\/p>\n

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To be sure, the advice would be tailored mainly for US investors, where the market for unlisted assets and alternative investments is large and highly developed. That may not necessarily hold true for India, although the market for unlisted and alternative assets here is evolving, too, as more startups emerge and new products such as real estate investment trusts and infrastructure investment trusts allow investors to gain exposure to new asset classes. Alternative investment funds\u2014which raise money from investors and invest in startups, real estate and infrastructure\u2014are growing, too.<\/span><\/p>\n

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Still, Indian investors don\u2019t have enough opportunities to follow a 50\/30\/20 model. Moreover, keeping an eye on different asset classes and spreading investments across multiple opportunities could be difficult and risky for many investors. Nevertheless, it\u2019s an idea worth considering.<\/span><\/p>\n

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Stay Liquid<\/b><\/h3>\n

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Moving back home, Trump\u2019s tariff shock comes just ahead of the Reserve Bank of India\u2019s monetary policy meeting next week. Many analysts now expect the RBI to deliver a 50-basis-point rate cut on April 9.\u00a0<\/span><\/p>\n

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With inflation remaining subdued for the past couple of months, the central bank is under pressure to support the economy \u2014 especially as India risks becoming a dumping ground for goods that are no longer viable to export to the US.<\/span><\/p>\n

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The likelihood of a rate cut is supported also by the RBI\u2019s announcement this week that it would buy government bonds worth Rs 80,000 crore, injecting fresh liquidity into the financial system.\u00a0<\/span><\/p>\n

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With credit growth outpacing deposit growth for some time now, the RBI has injected a staggering Rs 5 trillion into the banking system since January through various tools like government bond purchases and foreign exchange swaps.<\/span><\/p>\n

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Simply put, it\u2019s been ensuring banks have enough cash \u2014 both to meet withdrawal demands and to support fresh lending. After three months of relentless liquidity support, the system finally moved into surplus by end-March. This shift was crucial for the transmission of the RBI\u2019s February rate cut, as it put banks in a better position to reduce interest rates.<\/span><\/p>\n

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The fresh liquidity boost announced this week and the possible rate cut next week bodes well for borrowers hoping for lower EMIs. It may also help lift the sobering consumption and bridge the gap in capacity utilisation.<\/span><\/p>\n

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\"FD<\/a><\/p>\n

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Market Wrap<\/b><\/h3>\n

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India\u2019s stock markets resumed their downtrend this week after a strong show in March, dragged down by worries over Trump\u2019s tariffs and their impact. Both the BSE Sensex and the NSE fell about 2.7% each this week.<\/span><\/p>\n

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Metals and IT stocks were the biggest losers this week. Hindalco and HCL Tech both lost nearly a tenth of their value. Tata Motors was close behind on fears its Jaguar Land Rover unit will be hit because of the new auto tariffs in the US.<\/span><\/p>\n

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TCS, Infosys, Tech Mahindra and Wipro slipped more than 6% each. Tata Steel and JSW Steel, state-run ONGC, Bharat Electronics and Coal India as well as Larsen & Toubro and heavyweight Reliance Industries were the other major losers.<\/span><\/p>\n

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Consumer-focused companies such as Tata Consumer, Trent and Zomato were among the handful of companies that managed to eke out meaningful gains. IndusInd Bank, the biggest loser last week, was among the top gainers this week.<\/span><\/p>\n

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Other Headlines<\/b><\/h3>\n

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