India’s stock market may be wobbling under the weight of Trump’s 50% tariffs, but Jefferies’ global head of equity strategy, Christopher Wood, believes the latest move by the US President is no reason to panic. On the contrary, he sees it as a chance to buy into Indian equities.
The Trump administration recently imposed a second tranche of tariffs, bringing the levy on Indian goods to a hefty 50%. For many, the escalation seemed sudden and harsh, given India’s relatively lesser trade surplus with the US and its status as a key strategic partner.
Yet Wood contends it is only a matter of time before Trump softens his stance. “It pays to stand up to the Trump,” he remarked in his latest Greed & Fear note, pointing to past episodes where the US President eventually backed down from hardline positions.
What makes the new tariffs more baffling is their apparent link to India’s oil imports from Russia. India has been sourcing discounted crude from Russia since the Ukraine war, but Wood noted that China has been purchasing far greater volumes without facing comparable penalties. “The singling out of India in this fashion is not what most people would have predicted,” he said, adding that the move has ironically driven the BRICS grouping of Brazil, Russia, India, China, and South Africa, closer together.
Indian equities, however, have fell into in a tailspin, recording three consecutive weeks of losses. Over the past year, the Indian market has suffered its worst underperformance against global peers in 15 years. Wood attributes this to expensive valuations and a flood of new equity issuances. Yet with prices now cooling, he sees little downside left. Indian stocks still trade at a premium about 63% above emerging-market peers but that is back in line with their ten-year average.
Beyond trade tensions, US interest rates also loom large over global investors. July’s inflation numbers came in slightly better than expected, sparking hopes of a Federal Reserve rate cut in September.
As for the dollar, Wood expects it to remain in a downtrend, but warned that Fed chair Jerome Powell’s cautious, data-driven approach could still delay action. He suggested Trump’s criticism of Powell has less to do with economic fundamentals and more with reducing the government’s debt-servicing burden.
For now, Wood insists, Indian equities remain a market to watch. The turbulence created by Trump’s tariffs, he believes, is less a reason to retreat and more an opportunity to lean in.
