India leads global market recovery, first in world to rebound from Trump tariff shockIndia leads global market recovery, first in world to rebound from Trump tariff shock

By Admin

19 Apr, 2025

India has taken center stage in the global financial narrative, becoming the first major market to fully recover from the economic ripple caused by recent US tariffs. As global uncertainty lingers, India’s stock market resilience and strong domestic fundamentals have helped it stand tall among peers, reaffirming its position as a rising economic powerhouse.

Markets Rebound Post Long Weekend

Indian equities surged as markets reopened after an extended weekend, with the NSE Nifty 50 Index rallying 2.4% on Tuesday in Mumbai, surpassing its April 2 closing level. This powerful bounce-back marks a significant milestone — India is now the first major economy to erase losses from the tariff shock initiated by US President Donald Trump earlier this month. In contrast, a broader index of Asian stocks is still down over 3% since the announcement, highlighting India's relative strength.

Safe Haven Amid Global Volatility

India’s quick rebound underscores the growing global perception of its markets as a safe haven amid rising geopolitical and economic tensions. A solid domestic-driven economy, combined with its limited direct exposure to US trade, offers a cushion against global shocks.

According to Bloomberg, investors are favoring India over peers more exposed to the US, especially in light of the escalating US-China trade war. While China responded with retaliatory measures, India maintained a diplomatic tone, signaling readiness to pursue a provisional trade deal with Washington — a strategic move that enhances investor confidence.

Domestic Growth and Supply Chain Shifts

“We remain overweight India in our portfolios,” said Gary Dugan, CEO of The Global CIO Office. “Supported by good domestic growth and aided by a likely diversification of supply chains away from China, Indian equities are seen as a safer bet over the medium term.”

As global manufacturers reassess their dependencies, India is emerging as a key alternative to China in the global supply chain. This shift not only boosts India's industrial outlook but also positions it strategically for future growth in exports and manufacturing.

Investor Sentiment Improves

This recovery comes after a rough two quarters, where the Nifty 50 index had slumped nearly 10%, impacted by slowing economic growth, steep valuations, and foreign investor outflows. In 2024 alone, overseas investors have pulled out more than $16 billion from Indian equities, nearing the $17 billion record set in 2022.

However, a combination of improving investor sentiment, attractive stock valuations, expected RBI rate cuts, and declining crude oil prices is now helping Indian equities regain favor. For an import-heavy economy like India, falling oil prices significantly ease inflationary pressures and improve trade balances.

Valuations Signal Room for Growth

As per Bloomberg data, the Nifty 50 is trading at 18.5 times its projected 12-month earnings, slightly below the five-year average of 19.5 and well under the peak multiple of 21 seen in September 2023. This valuation reset provides a more appealing entry point for investors.

“India is not insulated, but relatively better positioned amid the risk of a trade war given its low direct revenue exposure to US, particularly on the goods side,” said Rajat Agarwal, strategist at Societe Generale SA.

India’s Share in US Imports is Modest

India accounted for just 2.7% of total US imports last year, compared to China’s 14% and Mexico’s 15%. This minimal exposure shields it from the brunt of US tariff policies and global trade tensions, allowing it to chart a steadier growth trajectory.

Conclusion

India’s rapid rebound from the Trump-era tariffs not only showcases the resilience of its financial markets but also cements its status as a promising global investment destination. With strong fundamentals, strategic trade diplomacy, and increasing relevance in global supply chains, India continues to lead the global market recovery, setting the tone for emerging economies worldwide.