Jefferies Forecasts India to Lead Emerging Markets Amid Global Turbulence
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Synopsis
On April 11, Jefferies announced its 'overweight' stance on India, predicting it will outperform other emerging markets amidst global uncertainties. The brokerage highlighted India's limited exposure to US and Chinese demand as a key buffer.
Key Takeaways
- Jefferies gives India an 'overweight' rating.
- India's exports to the US constitute only 2.3% of GDP.
- Brent crude prices dropping benefits India's economy.
- Robust FII and DII investments in Indian equities.
- US tariffs on Indian goods are relatively lower.
New Delhi, April 11 (NationPress) Global brokerage Jefferies has issued an 'overweight' recommendation for India, asserting that the nation is poised to surpass other emerging markets (EMs) in the face of growing global uncertainties.
In its recent analysis, Jefferies noted that while predicting absolute index performance is challenging, “India should stand out as a relative outperformer”.
Jefferies emphasized that India's limited reliance on US and Chinese demand serves as a significant protective measure.
Currently, India's exports to the US account for merely 2.3 percent of its GDP, despite the US being its largest export partner. The trade surpluses are equally modest, which mitigates the impact of stringent US trade policies.
Although the US has imposed 26 percent tariffs on Indian goods, this rate remains lower compared to the tariffs faced by China, Indonesia, and Taiwan.
According to the Jefferies analysis, “the Indian government is quite optimistic about achieving more favourable conditions during bilateral trade discussions with the US.”
With Brent crude prices dropping nearly 20 percent year-to-date to about $60 per barrel, India, being a significant net oil importer, is experiencing a financial boon.
Jefferies argues that this decline enhances the current account balance, compensates for possible decreases in the US trade surplus, and provides the government with increased revenue through higher fuel duties. The brokerage favors sectors such as lenders, power, telecom, automobiles, and real estate.
In March 2025, both foreign and domestic investors expressed robust confidence in the Indian equity market, with foreign institutional investors (FIIs) and domestic institutional investors (DIIs) acting as net buyers.
FIIs invested $975 million, while DIIs made even more substantial contributions with $4.3 billion in net purchases during the month, according to a report by JM Financial Securities.
The month saw a remarkable shift in FII sentiment. In the initial half of March, up to the 19th, FIIs were net sellers, but they became aggressive buyers in the latter half, infusing $3.6 billion into Indian equities.
Meanwhile, US President Donald Trump stated that trading partner countries that fail to come to an agreement with the US by July 9, coinciding with the end of a 90-day pause, would face tariffs at the reciprocal rates initially announced.
This announcement resulted in a surge in the Indian stock market during Friday's morning trade.
