Analysts Favor Indian Stocks Amid New Tariff Landscape
Following President Trump’s announcement of a 26% tariff on imports from India, analysts recommend investing in Indian stocks over those in other Asian markets. While volatility is anticipated, India’s lower tariffs relative to China make it a favorable option, with market strategists urging focus on domestic sectors and selective investments.
Despite potential volatility in Indian stock indices, analysts are bullish on Indian equities following President Donald Trump’s recent tariff announcements. Trump imposed a 26 percent tariff on imports from India, which is higher than tariffs on other regions such as the EU and Japan, and notably lower than the punitive rates on China. Analysts believe that the tariffs imposed on India are significantly less than those imposed on China, making Indian stocks a favorable choice in the Asian market.
Morgan Stanley, Global X ETFs, and The Global CIO Office have highlighted India as a preferred investment, suggesting that domestic-oriented sectors are more resilient to tariff pressures. These analysts recommend caution towards Taiwanese, South Korean, and Japanese exporters while advocating for investments in Indian and Singaporean markets.
The reaction to the tariffs is likely to shift investor focus from China back to India, particularly as recent outflows of foreign portfolio investments may reverse due to the heightened tariff challenges in China. Analysts suggest this situation may also induce selective investments in Australia and India, which are less impacted by these tariff changes.
India maintains a relatively high weighted average tariff on US imports at 9.5 percent, compared to only 3 percent for India by the US. The US remains a significant trading partner, comprising about 18 percent of India’s goods exports, while India’s share of US imports is modest at 2.7 percent as of 2024.
As trading opened, Indian benchmarks showed mixed signals, with the GIFT Nifty suggesting a downturn but recovering slightly to reflect early buy interest in the Nifty 50 Index. The market anticipates ongoing fluctuations as it adjusts to the implications of the new tariff regime, presenting both challenges and opportunities for investors looking toward India.
In summary, despite initial volatility expected in Indian stock markets due to new tariffs imposed by the US, analysts remain optimistic about Indian equities. They highlight India as a preferable investment destination compared to other Asian markets, particularly in light of the lesser tariffs compared to China. This shift may offer opportunities for recovery in the face of increased tariff pressures, especially for domestic-oriented sectors in India.
Original Source: www.business-standard.com
Post Comment