Domestic Consumption-Oriented Stocks Emerge Winner Amid Trump’s Tariff Rout

Amid a broad-based sell-off in global as well as domestic equity markets, domestic consumption-oriented companies have emerged as the winners as these companies are largely insulated from Trump’s agonising trade tariffs. These companies primarily rely on local consumer spending rather than exports or foreign demand. These sectors perform well when domestic consumption is strong, as they cater to the everyday needs of local consumers.

The National Stock Exchange (NSE) categorises domestic consumption companies as those where more than 50 per cent of the company’s revenue comes from domestic markets, other than export income. These companies largely fall under sectors like consumer non-durables, healthcare, auto, telecom services, pharmaceuticals, hotels, media & entertainment, all of which NSE has covered in its Nifty India Consumption index.

Domestic Consumption-Themed Stocks Stay Afloat In Green

Since Trump’s announcement of tariffs on April 2, the Nifty India Consumption Index, which consists of 30 stocks, has mostly remained positive. On April 2, ahead of the announcement, the index gained over 1.5 per cent. Even after the announcement, it managed to stay in the green, though only slightly, while the broader market experienced a sell-off. On April 4, however, it faced some pressure, ending the day lower, but it didn’t see the sharp declines that other sectoral indices did, which fell up to 6.5 per cent.

Nifty Metal index fell the most on April 4, crashing 6.56 per cent, followed by Nifty Pharma, Nifty Realty, and Nifty IT, with each falling in the range 3-4 per cent. Nifty FMCG and Nifty Bank, which come under the ambit of domestic consumption, managed to close relatively flat.

The Nifty India Consumption index closed 0.8 per cent lower. Of the 30 constituents, nine gained, while others closed in the red. Major gainers were Indigo, Tata Consumer Products, Max Healthcare, Apollo Hospitals, Adani Power, Colgate Palmolive, Nestle India, Asian Paints, and United Spirits.

Among the Nifty 50 stocks, which cater to the domestic consumption theme, Bajaj Finance, HDFC Bank, Axis Bank and ICICI Bank closed in the green in an otherwise weak market. Hindustan Unilever, Zomato, ITC and Bharti Airtel, though closed flat to slightly negative but didn’t see heavy selling as many other non-domestic consumption stocks did.

Domestic Consumption Companies Insulated From Trump Tariffs

Vaibhav Porwal, Co-Founder, Dezerv, said: “Domestic demand-oriented sectors are the most attractive investment opportunities in the current tariff environment. Cement, building materials, banks, and FMCG companies stand to outperform as they rely primarily on domestic consumption rather than international trade.”  He said these sectors derive their strength from India's internal economic dynamics and are relatively insulated from global trade tensions.

Porwal added, “Export-driven sectors like Information Technology and auto components face significant challenges as they are directly exposed to tariff impacts and broader global trade friction.”

Brokerage firm Elara Capital, in a recent report, noted that domestic-oriented sectors with a visible growth trajectory, like telecom and consumer discretionary industries such as hotels and aviation, are seen as favourable investments. The firm also pointed out that sectors where domestic manufacturing is being scaled up to replace imports, such as defense and related components, are relatively insulated, as shown by recent order inflows from the government. In the near term, Elara said, generic pharma companies, diversified infrastructure firms, and financials offer better risk-reward.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, too concurred and said that domestic consumption themes like financials and growth segments immune to tariffs like telecom, hospitality, healthcare, cement and digital platform stocks are likely to remain resilient.