Market correction: Buying opportunity or more pain ahead? Achin Goel of Bonanza explains

As new tariffs and slowdown worries unsettle global markets, the Indian equity market is witnessing high volatility. In an insightful conversation with Business Today, Achin Goel, Vice President at Bonanza, shares deep insights on the ongoing correction, sectoral shifts, and the road ahead for investors.

From tariff-led slowdowns to domestic resilience, he outlines actionable strategies to navigate FY26 and highlights which sectors are poised to lead the recovery amid global economic uncertainty. Edited excerpts

Q1: Is the current market correction a buying opportunity or do you expect further downside due to global uncertainty?

Achin Goel: Historically, when the U.S. has imposed large-scale tariffs, it has often led to a recession. A similar concern is surfacing now. As the U.S. drives global economic momentum, any slowdown there could impact growth across markets. While India may be relatively better positioned—especially if our competitors face higher tariff barriers—no market is immune if global investors begin offloading assets. We are likely to see continued volatility in Indian markets in the near term due to this global uncertainty.

Q2: Which sectors are likely to dominate in case of a market recovery?

Achin Goel: Sectors with strong domestic demand and those benefiting from shifting global trade patterns will lead the recovery. Defence, Textiles, BFSI, Renewable Energy, and Electronics Manufacturing are well-positioned due to their sound fundamentals. RBI’s rate cuts will support domestic consumption by reducing borrowing costs. Additionally, global supply chain shifts—especially from China—create fresh opportunities for India. The PLI scheme further strengthens the case for manufacturing-led growth.

Q3: Do you see a sectoral rotation happening, and if yes, which sectors may lose out?

Achin Goel: In Indian market, sectoral rotation is indeed underway, with certain sectors gaining prominence while others face challenges. Sectors like pharma, auto, metals, and IT—which rely heavily on exports—are under pressure. In contrast, domestically focused sectors such as Defence, FMCG, BFSI, Renewable Energy, and Infrastructure are expected to outperform in 2025. Emerging areas like Electric Vehicles (EVs) and Data Centres are also gaining traction, thanks to supportive policies and increased digital adoption.

Q4: How should Indian investors hedge or position their portfolios in light of increasing U.S. protectionism?

Achin Goel: Investors should shift focus towards sectors with minimal U.S. exposure—BFSI, Cement, Defence, Renewable Energy, and Electronics Manufacturing. Pharmaceuticals also remain a safe bet, as essential medicines are unlikely to be targeted. At the same time, reduce holdings in export-heavy sectors like IT. Keeping a 15–20% cash reserve offers protection and readiness to invest when valuations become attractive. A staggered investment strategy is ideal amid uncertainty.

Q5: Is the banking sector still a safe bet? How will any rate cut affect the sector in FY26?

Achin Goel: The outlook is mixed. Indian banks remain resilient due to robust domestic demand. Credit growth is likely to rebound to 13–14%, supported by RBI’s accommodative stance. While NBFCs may benefit more directly from lower rates, banks could face margin pressure. However, as rates stabilize, improved margins and deposit repricing should support long-term growth, with private banks expected to outperform their PSU counterparts.

Q6: What is your view on the PSU theme?

Achin Goel: Despite recent corrections, the long-term story for PSUs—especially in Defence, Railways, and Power—remains strong. FY25 saw over 60% of PSU stocks drop up to 40%, but government-backed capex and reforms continue to support these sectors. Defence benefits from self-reliance initiatives, railways from infra investments, and power from stable dividends and policy support. While short-term headwinds persist, the outlook remains promising for the long haul.

Q7: Could Trump’s new tariffs make global investors more cautious, and what impact could that have on foreign money coming into Indian stocks?

Achin Goel: The recent tariff implementation by the US has caused notable market volatility worldwide, which begs questions regarding foreign investment flows into developing nations like India. With U.S. tariffs expected to hit 25%, FPIs have already pulled out over $4.7 billion from Indian markets recently. However, India's exposure to U.S. trade is relatively low—exports to the U.S. form just 2% of our GDP. Ongoing trade talks may help ease tensions. Sectors driven by domestic demand—financials, aviation, cement, defence, and digital services—are likely to stay resilient. Despite short-term volatility, India remains one of the more stable emerging markets.

Q8: What should be the right strategy for equity investors to survive FY26 amid this volatility?

Achin Goel: As investors navigate the volatile equity market in India during FY26, a strategic approach is crucial to mitigate risks and capitalize on opportunities. Given the current market conditions, a selective equity exposure is recommended. Focus on rate-sensitive sectors, hospitals, and utilities—these offer strong earnings visibility in a lower interest rate environment. Use staggered investments in small and midcaps to handle market swings. Diversification across sectors and asset classes like gold and debt can balance risks. A disciplined strategy combining selectivity, liquidity, and patience will help investors navigate FY26 successfully.