Trump Tariff Shocks Ebbing? Ridham Desai Says 'Moment Has Come' For Value Investors

US President Donald Trump’s trade policies are nothing to be concerned about and what has actually transpired on ground isn't close to the expected worst-case scenario, according to market veteran Ridham Desai.

The Managing Director and Chief Equity Strategist India, Morgan Stanley further weighed in on the ongoing market correction and said that key macros remain positive and the “moment has come” for value investors to take advantage of it.  

"The tariffs that were expected on China don’t seem to be materialising. If anything, business sentiment in the US is strong and improving, and India will follow suit soon," Desai said in the NDTV Profit Conclave. While global growth concerns had loomed due to policy actions, those fears are now diminishing, he said. 

Desai pointed to key macro tailwinds such as lower oil prices, reduced geopolitical risks, slower fiscal consolidation, tax cuts, structural reforms, and record-high capital expenditure. "I'm very bullish. For those waiting for India to become more attractive in terms of valuation and performance, the moment has come," Desai said.

The market veteran noted that while there are several global risks, Trump’s trade policies are no longer a major concern. "He has put his cards on the table, and they look benign. This is nothing close to the worst-case scenario we feared. India recently secured a superb trade and defense deal with the US, which should drive greater economic and military cooperation."

Desai further emphasized that India’s equity market is attractively valued in gold terms. The current level is the cheapest the Sensex has been in gold ounces since November 2020, the Chief Equity Strategist said.

The benchmark NSE Nifty 50 and the BSE Sensex have fallen 13.3% and 11.7%, respectively, from the previous peak, triggering the worst fall since 2020.

Foreign Institutional Investors are currently underweight on Indian equities at historically low levels, Desai said, adding that India’s correlation to global markets has fallen drastically. 

The underweight in domestic stocks is partly due to India’s classification as an emerging market. "The EM cohort that was once attractive in the 1990s is no longer the same. Many assets in emerging markets are shrinking, and India is facing some of that impact," the Chief Equity Strategist said.

However, Morgan Stanley expects FII flows to return in the coming weeks or months, as India has significantly underperformed China. "I underestimated China's policy stimulus. Initially, it seemed ineffective, but it ultimately marked the bottom for Chinese stocks and the top for Indian stocks. Now, the relative valuation chart looks very attractive for India."

Foreign institutional investors have offloaded stocks worth Rs 1.16 lakh crore in 2025 and sold stocks worth Rs 3.04 lakh crore since September.

Ridham Desai believes that the market has overlooked critical positives from the recent budget and the central bank’s policy shift.

"The budget was phenomenal. It continues to consolidate the fiscal deficit at a slower pace while increasing capex and cutting taxes. That’s an incredible combination for the economy, and at the same time, the RBI has pivoted," he said.

Despite these tailwinds, Desai remarks that the market lacks enthusiasm. "I am amazed that people don’t see this as an opportunity. In hindsight, they will realize it. It is impossible to catch the exact bottom, but if the market dips another 5-7%, investors should buy more. The outcome will be favorable."

Regarding recent market corrections, Desai emphasized that such volatility is normal. "Markets do not move in a straight line. This correction stemmed from a growth slowdown, largely due to fiscal consolidation and RBI’s hawkish stance. That slowdown lasted for two quarters, but in my view, we are already coming out of it," he added.

Desai reiterated his long-term bullish stance on Indian equities, drawing parallels between India’s growing equity market participation and the US 401(k) pension reform in the 1980s.

"In 2015, when India allowed retirement funds to invest in equities, I called it India’s ‘401(k) moment.’ This is similar to when Ronald Reagan introduced 401(k) plans, allowing American pension funds to enter the stock market. That reform triggered a 20-year bull run in the U.S., which only ended with the Nasdaq bubble," he said.

India, he believes, is in the early stages of a similar long-term bull run. "Because of our younger population, this rally could last even longer than 20 years. It will likely only end when we hit an equity market bubble," he said.