Indian stock markets have bounced back from the global tariff tremors, becoming the first major market in the world to erase all the losses triggered by US President Donald Trump’s reciprocal tariff announcement earlier this month.
The NSE Nifty 50 index surged by 2.4% in Tuesday’s session, reclaiming its April 2 levels — the day Trump signed the executive order imposing fresh tariffs on US trading partners. The rally came as trading resumed in Mumbai after a long weekend, with Monday closed for Ambedkar Jayanti.
A Global Safe Haven Amid Trade War Tensions
Global investors are now viewing India as a relative safe haven amid market turbulence caused by intensifying US-China trade tensions. Unlike China, which retaliated against US tariffs, India has taken a conciliatory approach, working towards a provisional trade deal with Washington. This strategic move has positioned India as a preferred destination for global funds looking to diversify away from China.
“We remain overweight India in our portfolios,” said Gary Dugan, CEO of The Global CIO Office. “Supported by good domestic growth and a likely diversification of global supply chains, Indian equities are a safer bet over the medium term,” he added.
Why India Is Different
India’s domestic-driven economy, massive population of 1.4 billion people, and low direct revenue exposure to US goods tariffs offer it a buffer against global shocks. According to Bloomberg data, India accounts for just 2.7% of total US imports, compared to 14% for China and 15% for Mexico.
Adding to the optimism, falling global crude oil prices — crucial for a major oil-importing nation like India — and expectations of further interest rate cuts from the Reserve Bank of India (RBI) have lifted market sentiment.
Recovery After a Slump
The recent resurgence comes after the Nifty 50 fell nearly 10% over the last two quarters, driven by tariff fears, foreign fund outflows, and high stock valuations. Overseas investors have already pulled out over $16 billion from Indian equities this year, nearing the record $17 billion exit in 2022.
Currently, the Nifty 50 is trading at 18.5 times its 12-month forward earnings estimates, below its five-year average of 19.5 times, suggesting valuations have cooled and opened up room for fresh investments.
Amid a trade war where China’s position grows increasingly fragile, India is gaining global attention as a viable alternative manufacturing hub and investment destination. The country’s steady approach, trade negotiations with the US, and robust domestic demand give it a distinct advantage in today’s uncertain global environment.
If oil prices remain low and trade tensions persist, India’s equity markets are well-positioned to extend their lead, making them one of the most resilient markets in the world.
