“India seems better positioned relative to most Asian equities following the tariff announcements,” said Hong Kong-based Alex Wolf, who heads Asia investment strategy at J.P. Morgan Private Bank
New Delhi: The heightened global uncertainty due to the US sweeping tariffs on India and other countries may cause near-term corrections and market turbulence, but the long-term outlook remains constructive, market experts said on Thursday.
The US has announced 27 per cent reciprocal tariffs on India, citing high import duties imposed by New Delhi on American goods. This move aims to reduce the US trade deficit and boost domestic manufacturing under the Trump administration’s economic agenda.
While this development is expected to impact India’s exports to the US, experts believe that India is better positioned than its competitors, who also face increased levies.
Indian equity markets are better placed than their Asian counterparts to ride out the impact of sweeping tariffs rolled out by U.S. President Donald Trump, according to strategists at JP Morgan Private Bank and Morgan Stanley.
The U.S. tariff on India is nearly half of that on China and significantly less than that on Vietnam.
India’s share of exports to the U.S. is lower than its regional peers, at 2% of GDP, and economists peg the impact of tariff hikes on GDP growth at a modest 0.3 percentage points to 0.5 percentage points.
“India seems better positioned relative to most Asian equities following the tariff announcements,” said Hong Kong-based Alex Wolf, who heads Asia investment strategy at J.P. Morgan Private Bank.
The headline tariff rate for India is lower than expected and the country’s equity markets are more sensitive to the domestic economy, which is expected to find support from accommodative monetary policy, Wolf said in a note on Thursday.
“While heightened global uncertainty may cause near-term corrections and market turbulence, India’s macroeconomic fundamentals remain solid,” Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Group, said.
This resilience is further supported by positive signs in the equity markets.
Notably, Foreign Portfolio Investors (FPIs) turned net buyers in the week ended March 2025, infusing nearly Rs 28,000 crore. This marked the end of a 16-week outflow streak, the longest in 25 years.
Building on this optimism, Hajra said, “With greater uncertainties in the US and China, we expect FPIs to turn more positive on India. With resilient corporate earnings, steady domestic flows, and equity valuations below historical averages, the medium- to long-term outlook for Indian equities remains favourable.”
However, the immediate impact of the tariffs is evident in the markets. The 30-share BSE Sensex declined by 378.60 points, or 0.49 per cent, to 76,238.84 in morning trade. During the session, it depreciated by 809.89 points, or 1.05 per cent, hitting an intraday low of 75,807.55. Similarly, the broader NSE Nifty slipped 80.60 points, or 0.35 per cent, to 23,251.75.
From an Indian investor’s perspective, the US reciprocal tariffs bring both concern and clarity. Key export-oriented sectors like electronics, textiles, gems & jewellery, auto parts, and processed foods face headwinds due to steep US duties.
The pharmaceutical sector — a critical pillar of India’s exports — has been exempted, providing a silver lining.
“This is a major relief, especially since Indian pharma supplies over 40 per cent of the US generic drug demand. Along with IT services and select chemicals, these sectors remain outside the tariff drag. For India, this split offers an opportunity to double down on sectors like pharma that retain global competitiveness despite geopolitical churn,” said Anirudh Garg, Partner and Fund Manager at Invasset PMS.
In February, the Indian government slashed income tax for individuals and the Reserve Bank of India kicked off its rate cut cycle.
The RBI also infused cash into the banking system and is expected to cut rates again next week.
Prospects of a recovery in economic growth, alongside limited exposure to tariff risk and a U.S. slowdown have made Indian stocks a favoured bet for Morgan Stanley research.
The brokerage reiterated its overweight recommendation on India after the tariffs were announced and has previously said it finds valuation of Indian stocks attractive versus emerging market peers.
The Indian central bank projects growth momentum to pick up in the April-to-June quarter while inflation is expected to average 4.2% in the fiscal year that started April 1.
In light of these developments, Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, advised investors to remain cautious. “This is a time to focus on quality investments and monitor macroeconomic trends closely. Markets may remain uncertain until there’s clarity on retaliatory measures and the Federal Reserve’s stance,” Srivastava said.
While valuations of Indian stocks had stretched following a surge last year, they have since eased as the benchmark Nifty 50 index (.NSEI), fell as much as 16% from record-high levels in September before recouping some losses in March.
On the day, the relatively lower tariffs were helping Indian shares outperform regional peers.
The Nifty was down about 0.2% while Vietnamese stocks (.VNI), opens new tab fell more than 6% and Hong Kong’s benchmark Hang Seng Index (.HSI), opens new tab was down 1.5%.