Following US President Donald Trump's positive remarks about a potential US-India trade deal, Vikas Khemani, founder of Carnelian Asset Management and Advisors, believes the market should be positive.
While noting Trump's negotiation style has a pattern, he said that India was patient and that paid off. The two nations have a close ties and need each other, according to Khemani, making an eventual agreement inevitable.
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India's Patience Paid Off
"We all know how Trump tries to negotiate. He first pushes you in a corner, bullies you and then comes to the table. We have seen that pattern with China, but India did not have the same levels as China. India I think was patient and not reactive so that eventually paid off," he explained.
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Khemani expects the trade tensions to "settle down in the next three to six months" because the current 50% tariff is not sustainable for either side. He considers this a positive development, as the uncertainty in the markets will lower potentially.
He also added that this de-escalation could also lead to a short-term rally driven by short-covering or fresh fund deployment.
Domestic Reforms Cushion Economy
Zooming back into the domestic economy, Khemani notes that the government's proactive policies provides a strong cushion.
"GST measure, liquidity measure, push on infrastructure were all planned well. So net net I think markets should be positive. Its surely a positive cue, I wouldn't say its behind," he said. Khemani pointed out that these measures ensure that even with global trade uncertainties, there will be "no major growth impact."
The strategic patience shown by India and the underlying strength of the domestic economy, he notes, suggest a favorable resolution on the horizon.
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