India Assets Fare Better Than Rest Of Asia After Tariffs Reveal
Nifty 50 nearly pared its initial loss of 0.8%, helped by gains in drugmakers, while the rupee fell less than most emerging Asian peers.
Indian assets suffered less than their Asian peers Thursday after President Donald Trump’s tariff measures were perceived as less severe on the nation’s economic growth and corporate profits.
The stocks benchmark NSE Nifty 50 Index nearly pared its initial loss of 0.8%, helped by gains in drugmakers, while the rupee fell less than most emerging Asian peers. The drop in local equities is more subdued than the MSCI Asia Pacific Index, which slid to its lowest level since Feb. 4.
“Reciprocal tariff announcements come across as a relief, as no incremental adverse impact on large exporting sectors,” Jefferies Financial Group Inc analysts including Mahesh Nandurkar wrote in a note. The levies on Indian exports “are looking reasonable from a relative perspective,” he said.
Despite Indian assets’ slight outperformance versus other Asian markets Thursday, the unpredictability of the measures threatens to unsettle Indian equities just as they were regaining their footing.
The Nifty 50 rallied 6% in March, paring some of the year’s earlier losses. Valuations have also moderated, with stocks trading at almost 19 times estimated earnings — a marked drop from previous months. Investors have been buoyed by improving economic indicators, central bank liquidity injections, and expectations of an interest rate cut next week.
“While there are positives — China will be severely impacted by these tariffs — there’s also a risk that goods previously exported to the US could be diverted to India,” said Sreeram Ramdas, portfolio manager at Green Portfolio PMS.
The Trump administration’s tariffs on imports from India were far lower than China’s rate of at least 54%, and those imposed on other regional manufacturing rivals like Vietnam, which was hit with a 46% duty.
Indian pharma stocks were a bright spot after the sector was unexpectedly exempted from US import taxes. The Nifty’s healthcare gauge rallied as much as 5%, its biggest intraday surge since Sept. 2020. Europe and the US account for 55% of India’s pharma exports, according to data from the Pharmaceutical Export Promotion Council of India.
“While India’s pharma sector has been exempted, the implications for other sectors are mixed,” said Sonam Srivastava, founder and fund Manager at Wright Research in Mumbai. “Equities may remain under pressure, especially sectors sensitive to global demand and trade. This is a time to stay cautious, focus on quality, and watch macro developments closely.”
