Donald Trump is ready to go full beast mode on tariffs, and no one’s safe, not even Washington’s best buds.
But with his bromance with Prime Minister Narendra Modi in full swing, could Trump turn into the Santa Claus India’s been waiting for?
Fo sho. Indian stocks are rebounding hard this month, after being one of the rare losers in October (they dropped 6%) – just in time to steal the spotlight back from China’s stimulus-fueled rally.
Deja Vu? The year before Trump last took office, India’s benchmark Nifty 50 index moved like a sloth, crawling up 1%. But after Trump took the reins in 2017? It skyrocketed 40%.
Foreign investors are already all in on India for its world-beating growth, soaring consumer spending, its gargantuan workforce and its shift from pure services to a broader economy.
Bai-bai, China
India’s set to be a big winner from Trump’s anti-China stance, says Garima Kapoor, an economist with Elara Securities. Modi’s “Make in India” push could get a fresh shot of adrenaline as companies lean towards US-friendly countries.
Top dogs in India’s defense and chemicals sectors with steady US clients are all set to cash in. The US is India’s biggest defense and chemicals buyer, and Trump’s anti-China stance is great news. Tata already makes parts for both Boeing and Lockheed Martin.
Sectors like autos and renewables are poised for a boost in exports as the Trump regime’s anti-China sentiment steers businesses away from Chinese manufacturing, says Robins Joseph, an investment advisor with myguide2wealth.
Beyond the China-bashing, US tax cuts could also propel companies to spend more on tech services, says Kapoor. IT exporters like TCS, Infosys, HCL and Tech Mahindra are bound to cash in. During Trump 1.0, the Nifty IT index was up by a whopping 100%.
And from a macro POV, Trump’s focus on fracking and raising US hydrocarbon output should keep oil prices muted. A major win for import-heavy India. Drill baby, drill!
But hold them horses
Some of Trump’s policies are iffy for India, though. On paper, a weaker Indian rupee and continued anti-China policies could be a boost for Indian pharma, Kapoor says.
But Nomura is warning that if Trump’s promise of a 10% tariff were to become real, it could hit Indian generics exporters hard. The US accounted for over 31% of India’s $28 billion-worth of pharma exports in the last financial year, according to government data.
And you know that Trump loves his greenbacks. He hates de-dollarization and will be pulling every lever to keep it strong. A rising dollar could mean capital moving back from emerging markets to the US.
While Indian markets love Trump, the real story could be less rosy: a slowing earnings cycle, moderating consumption and delayed government spending could spell trouble once the Trump hype cools down.
