Niket Shah, CIO of the Motilal Oswal Mutual Fund, says the timing of Trump's 50% tariffs on India further exacerbates the country's domestic slowdown. However he is remaining bullish as he thinks the worst may be over and government reforms will further help offset the damage.

Delhi

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

Recent U.S. tariffs introduced by the Trump administration have added pressure to India's already slowing economy, with key indicators such as GST and tax collections showing signs of weakness. This has resulted in foreign institutional investors (FIIs) withdrawing significant funds from Indian markets, with outflows reaching up to $5 billion since July.

Despite these challenges, domestic institutional and retail investors have provided strong support, contributing $3 to $4 billion in net inflows monthly. Market analysts suggest that if the Indian government successfully implements its announced reforms, there could be a positive shift in market sentiment and performance in the near future.

Trump’s tariffs versus India’s growth story - who wins?

I think the timing of Trump tariff was kind of a bit surprising to us, because the country, if you look at post-election, there has not been any major reform from the government till now. And all the high-frequency indicators, whether it's GST collection, tax collection, had seen signs of weakness. And U.S. tariff coming at a time where domestic economy has been slowing down has been a double whammy for the Indian markets as such. Now, this comes at a time where the valuation has been reasonably expensive. And hence, FIIs have been net short in India today from a derivative standpoint, as well as we've been seeing at least $2 billion of selling every month from FIIs. Now, the good news is that if the government is able to pull up the reform process, which they have recently announced, then we should see some short covering towards the second half of the year. And that is why we are actually bullish at current levels. We believe that the worst is in the price. And with government reforms around the corner, hopefully we should see better days going forward. Indeed, as you were saying, Indian equities seeing around $5 billion in foreign outflows since July. So we're seeing money being pulled out of these markets. But at the same time as well, others have told me this week that this is an opportunity to buy into that pullback, maybe an opportunity to buy the dip. You agree with that? Absolutely. I think the domestic flows have been very, very strong in India. We have seen net inflows of roughly about $3 billion to $4 billion every month from the domestic institutional investors and the retail participants of India as well. So that's kind of cushioning a large amount of FII outflows and keeping markets broadly at the similar levels where we are. So we do expect some consolidation with a positive bias once the reform starts playing out.

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Minneapolis

FBI investigating Minneapolis Catholic school shooting as hate crime

UN officials and aid agencies have warned that famine in Gaza is no longer a looming threat but a present reality, with children increasingly dying of hunger. In a blunt address to the UN Security Council, officials described the famine and widespread hunger in the enclave as “engineered” and “man-made” disasters.

New York

Middle East Conflict

UN Security Council affirms Gaza famine is manmade

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Copenhagen

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Nuuk

Denmark summons U.S envoy over claimed interference in Greenland

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Starbase

SpaceX launches Super Heavy-Starship in test flight

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New Delhi

U.S. raises India tariffs to 50 percent over Russian oil purchases

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Washington

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Tel Aviv-Yafo

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Mason

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Council of the City of Sydney

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Texas

Rise of AI

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Kyiv

Ukraine Invasion

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Chicago

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Jerusalem

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Napa Valley

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Trump’s tariffs versus India’s growth story - who wins?

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