Ashwath Damodaran Issues Warning Amid Trade Uncertainties for India
Ashwath Damodaran warns of potential adverse effects on India’s economy due to global trade uncertainties under U.S. tariffs. Investor sentiment is declining, marked by notable FII outflows, which adds to the uncertainty regarding future market conditions, especially as the U.S. Fed approaches its interest rate decision.
Ashwath Damodaran emphasizes caution amid the rising optimism surrounding India as global trade uncertainties persist. The actions of U.S. President Donald Trump—who has aggressively imposed tariffs—have created concern for all nations, including India where reciprocal tariff threats have emerged. Damodaran warns that a potential trade war could significantly alter the global landscape, stating, “The world that will prevail, if a trade war plays out, will be very different than the one that existed before globalization took off.”
The repercussions of these trade tensions are evident, as global markets, particularly the Nasdaq, experienced sharp declines recently. While there have been slight recoveries in the market, investor sentiment remains adversely impacted in India by fears over sustained foreign institutional investor (FII) outflows, totaling Rs 5,729 crore in the cash segment. As such, uncertainty around Q4 earnings is rising.
Experts note that inconsistent tariff policies emanating from the U.S. administration have compounded investor uncertainties regarding economic outcomes. Additionally, looming macroeconomic events, including an upcoming decision by the U.S. Federal Reserve on interest rates, may further influence market trajectories, shrouding the economic outlook in ambiguity.
In summary, Ashwath Damodaran’s perspective on the unfolding trade conflict underscores the potential challenges that India may face amidst global market fluctuations. The uncertainties surrounding U.S. tariff policies and their implications for foreign investments are significant concerns for India’s economic landscape. Key upcoming events, including the Federal Reserve’s interest rate decision, are expected to play crucial roles in shaping market stability moving forward.
Original Source: m.economictimes.com
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