India leads global market recovery, first in world to rebound from Trump tariff shock

NEW DELHI: Indian equities surged as markets reopened after an extended weekend, with the NSE Nifty 50 Index rallying by as much as 2.4% on Tuesday in Mumbai, surpassing its April 2 closing level. According to Bloomberg, this rebound makes India the first major market globally to erase losses stemming from the reciprocal tariffs imposed by US President Donald Trump earlier this month.
While a broader index of Asian stocks remains down over 3% since the tariff announcements, India’s swift recovery has underscored its growing perception as a relative safe haven amid ongoing global market volatility, as per the Bloomberg report.
Strong domestic fundamentals
Investors continue to view India’s large domestic-driven economy as better equipped to weather a potential global slowdown compared to peers more directly exposed to US tariffs. The escalating US-China trade war has further positioned India as an attractive alternative for global manufacturing, with India maintaining a conciliatory approach and working toward a provisional trade agreement with Washington, in contrast to Beijing’s retaliatory stance.
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“We remain overweight India in our portfolios,” said Gary Dugan, CEO of The Global CIO Office. “Supported by good domestic growth and aided by a likely diversification of supply chains away from China, Indian equities are seen as a safer bet over the medium term,” he told Bloomberg.
Investor outlook improved
India’s sharp rebound follows a nearly 10% slump in the Nifty 50 over the past two quarters, triggered by slowing economic growth, steep valuations, and continued foreign investor outflows. So far this year, overseas investors have sold more than $16 billion in Indian equities on a net basis, close to the record $17 billion withdrawn in 2022.
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Still, improving investor sentiment is being supported by relatively lower stock valuations, expectations of aggressive rate cuts by the Reserve Bank of India, and declining crude oil prices — a major positive for India’s import-heavy economy.
India seen as resilient amid global trade risks
As per Bloomberg data, the Nifty 50 is currently trading at 18.5 times its projected 12-month earnings, compared to a five-year average of 19.5 and a peak multiple of 21 in late September.
“India is not insulated, but relatively better positioned amid the risk of a trade war given its low direct revenue exposure to US, particularly on the goods side,” said Rajat Agarwal, strategist at Societe Generale SA. “Indian equities should also benefit if oil prices sustain at low levels.”
Data compiled by Bloomberg shows India accounted for just 2.7% of total US imports last year, far lower than China’s 14% and Mexico’s 15%.