Will Trump Reverse His High Tariff Policies and Encourage Investment in India?
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Synopsis
Jefferies advises clients to invest in Indian stocks as Trump’s tariff policies may shift, signaling a potential turnaround in relations. With a focus on long-term gains, the report emphasizes India's resilience in the face of global economic challenges.
Key Takeaways
- Jefferies recommends investing in Indian stocks.
- Trump's tariff policies may shift positively.
- India has faced significant market underperformance recently.
- De-dollarisation could be a trend among BRICS nations.
- Indian equities are trading at more favorable valuations now.
Mumbai, Aug 18 (NationPress) - The US brokerage firm Jefferies has advised its clients to invest in Indian stocks instead of divesting, anticipating a reversal in US President Donald Trump’s tariff policies, according to a report released on Monday.
Christopher Wood, a prominent analyst at Jefferies, indicated that clients should explore investment opportunities in India due to the prevailing global market conditions and the likelihood of a shift in Trump's approach, which may not serve America's best interests.
"It is only a matter of time before Trump reconsiders his position, which is not aligned with America's interests... Notably, history shows that challenging Trump's policies often yields positive results," Wood asserted.
Wood mentioned that Trump's stance against key economies could push BRICS nations—Brazil, Russia, India, China, and South Africa—towards de-dollarisation, a situation where countries opt for non-dollar currencies for transactions instead of the US dollar.
He emphasized that Jefferies has retained a bullish outlook on India, particularly within its Asia ex-Japan long-only portfolio.
The report highlighted that India has gone through its most significant underperformance in the last 12 months compared to global emerging markets in the previous 15 years.
The brokerage firm maintained a "marginal Overweight" position on India in its relative-return strategy for Asia excluding Japan.
“India presents the most compelling long-term structural narrative in Asia,” although the market is facing high valuations and substantial equity supply, Wood noted.
Indian stocks are currently trading at 20.2 times one-year forward earnings, a decrease from 22.4 times at the peak in October 2021.
Wood highlighted that BRICS nations are reuniting mainly due to the absence of a coherent framework in the US administration's foreign policy.
In related news, various media reports have suggested that the planned visit by US trade representatives to New Delhi from August 25 to August 29 is likely to be postponed.
Trade relations between India and the US have deteriorated after the US imposed a 25 percent tariff on Indian exports, with threats of an additional 25 percent duty set to take effect on August 27.
Point of View
It is crucial to acknowledge the complexities of international trade relations. Jefferies' optimistic outlook on Indian equities highlights the resilience of emerging markets amid global economic shifts. It’s essential to remain informed and prepared for potential changes in policy that could affect both domestic and international investment strategies.
NationPress
19/08/2025
Frequently Asked Questions
Why is Jefferies recommending Indian stocks?
Jefferies believes that a potential turnaround in Trump's tariff policies may create favorable conditions for investment in Indian equities.
What is de-dollarisation?
De-dollarisation refers to the process where countries use currencies other than the US dollar for international transactions.
How has India's stock market performed recently?
India has experienced its most significant underperformance in the past year compared to global emerging markets over the last 15 years.
What are the implications of the US tariffs on India?
The 25 percent tariffs imposed by the US on Indian exports have strained trade relations and could impact investment decisions.
What is the outlook for Indian stocks according to Jefferies?
Jefferies maintains a bullish outlook on Indian stocks, noting their potential for long-term growth despite current high valuations.
