Potential Trump Tariff U-Turn Could Boost Indian Stocks Amid Trade Tensions

Mumbai (The Uttam Hindu): American brokerage firm Jefferies has advised its clients to buy instead of selling in India. It has also said that a U-turn is certain on US President Donald Trump's tariff policies. Christopher Wood, a leading analyst at the American brokerage firm, said that his clients are considering investing in India due to the current global market environment and the possibility that Trump will eventually change his stance, which is not in the interest of America.

Wood said, "It is only a matter of time before Trump backs down from his stance, which is not in the interest of America. This makes it clear that if someone stands up to Trump, he benefits." Wood has clarified that any action by Trump against the BRICS countries will lead them towards de-dollarization. The BRICS countries include Brazil, Russia, India, China and South Africa. De-dollarization is a situation in which countries start doing foreign trade in other foreign currencies or domestic currencies instead of the dollar. The analyst said that Jefferies has consistently maintained a bullish stance on India, especially in its Asia (excluding Japan) long-only portfolio.

Compared to global emerging markets over the last 15 years, India has performed the worst in the last 12 months, the report said. The brokerage firm also maintained a "marginal overweight" stance on India in Asia (excluding Japan). Wood said, "India represents the best long-term structural position in Asia," although the market is "facing high valuations and heavy equity supply." Indian stock markets are trading at 20.2 times one-year forward earnings, down from the October 2021 high of 22.4 times. Wood said the BRICS countries are reuniting mainly due to the lack of an ideological framework in the US administration's foreign policy.

Several media reports have claimed that the US trade representatives' proposed visit to New Delhi between August 25 and 29 may be rescheduled. Trade relations between the two countries have deteriorated after the US imposed a 25 per cent tariff on Indian exports. An additional 25 per cent duty has been threatened to be imposed from August 27.