US broking firm Jefferies has advised its clients to consider investing in Indian stocks, even amid ongoing trade tensions. The firm suggested that US President Donald Trump’s high tariff policies are likely to change, which could benefit global markets, including India.
Jefferies emphasized that the current global market environment makes India an attractive destination for investors. The firm highlighted that staying invested in Indian equities could be favorable as Trump’s stance on tariffs is expected to shift.
Potential Impact of US Tariffs on Trade
According to the report, the US administration’s aggressive actions against major economies have caused concern in global markets. Jefferies pointed out that the president’s approach could lead BRICS countries—Brazil, Russia, India, China, and South Africa—to move toward de-dollarisation.
De-dollarisation is when countries start using currencies other than the US dollar for international trade and payments. This can help countries reduce dependency on the dollar and potentially lower risks from US policy changes.
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Trade relations between India and the US have recently faced challenges. Recently, the US imposed a 25% tariff on certain Indian exports, affecting industries like steel, aluminium, and other goods. Tariffs increase the cost of goods exported to the US, affecting businesses and trade flows.
The broking firm noted that India has been underperforming compared to other emerging markets over the past year. Despite this, the country remains a significant opportunity for long-term investment. Jefferies has maintained a bullish outlook on India, particularly in its Asia ex-Japan portfolios.
Current Market Conditions in India
Indian equities are currently trading at 20.2 times their projected one-year earnings. This marks a decline from a peak valuation of 22.4 times in October 2021. The broking firm explained that the market faces high valuations and a large supply of equities but continues to show structural growth potential.
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Jefferies has assigned a “marginal overweight” rating to India in its relative-return Asia ex-Japan portfolio. This means the firm slightly favors investing in Indian stocks compared to other countries in the region. India is considered a key part of the portfolio due to its growing economy and potential for long-term returns.
The report highlighted that BRICS nations are increasingly working together. BRICS collaboration involves cooperation in trade, finance, and development projects among Brazil, Russia, India, China, and South Africa. This cooperation aims to strengthen economic ties and reduce reliance on Western-dominated financial systems. Such coordination can influence global trade patterns and currency use.
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US-India Trade Relations and Upcoming Visit
Meanwhile, media reports indicate that the visit of US trade representatives to New Delhi, initially scheduled for August 25–29, may be rescheduled. The visit is aimed at discussing trade issues and negotiating terms between the two countries. Analysts noted that potential adjustments in tariffs could influence trade flows and investor decisions.
Jefferies noted that historical patterns suggest US policy may eventually move toward easing tariffs. The broking firm pointed out that maintaining investments in Indian equities could be beneficial while the situation evolves.
Analysts also highlighted that ongoing discussions between the two countries could impact trade, making the movement of goods smoother if tariffs are adjusted or postponed. This emphasizes the importance of monitoring trade developments for investors.
The report concludes by highlighting that, despite short-term challenges, India continues to offer significant opportunities in the global market. Investors are encouraged to consider the country’s growth potential while keeping track of developments in US trade policy.