Investors see security in India as Trump win casts shadow on rising markets

By Jaspreet Kalra

MUMBAI (Reuters) – Global buyers are prone to discover relative security in India’s monetary markets from the spillover of Donald Trump’s financial insurance policies, together with from any protectionist commerce insurance policies that would spark rising market volatility.

Trump’s decisive election victory final week and his impending return to the White House subsequent month has raised important uncertainty for buyers.

However, India’s sturdy financial development, restricted publicity to Chinese and the U.S. client market, sturdy native urge for food for equities and a central financial institution devoted to making sure foreign money stability will bolster the nation’s attraction amid world unease, buyers and analysts say.

Stocks in Asia’s third-largest financial system are additionally prone to discover assist from sturdy home shopping for on account of Indian corporations’ restricted reliance on export revenues.

That’s important as markets worry Trump will reintroduce his ‘America First’ insurance policies, elevating the spectre of a worldwide commerce warfare.

China is on the frontline of threat as the previous president has threatened tariffs of 60% or extra on all Chinese imports, which is prone to heap extra strain on the world’s second-biggest financial system.

Tariffs on China are anticipated to negatively impression export-oriented Asian economies, in accordance with analysts at Societe Generale, who see India as higher positioned than Korea and Taiwan to deal with the fallout.

“Without any major fiscal announcement, China is likely to face downward pressure from Trump’s victory,” mentioned Sat Duhra, a Hong Kong primarily based portfolio supervisor on the Asia (ex-Japan) fairness staff at Janus Henderson Investors.

Some buyers had pivoted away from India to purchase Chinese shares final month however “there could be a reversion back to India in a quicker than expected time frame” due to its standing as a secure haven, Duhra mentioned.

While overseas buyers pulled out a report $11.2 billion from Indian equities in October, home institutional buyers’ inventory purchases rose to an all-time excessive of about $12.7 billion in the identical month, limiting the benchmark indexes’ fall.

Domestic buyers see India benefiting from provide chain diversification of U.S. corporations, in sectors like digital manufacturing, chemical substances, and prescribed drugs, mentioned Trideep Bhattacharya, president and chief funding officer for equities at Edelweiss Mutual Fund.

India’s financial fortunes have additionally shifted because the final Trump presidency when GDP was slower versus a strong 8.2% tempo in the newest monetary yr ended March 2024.

Story Continues