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When asked about the impact of persistent US tariff risks, Singh said, “International investors have really moved on from this. So, it is not a big deal for India and it is not a big deal for us as well. The point is, for US investors there are too many other avenues of concern—such as the Federal Reserve’s stance and potential government regulations—which are much bigger worries for the US economy right now.”
Singh highlighted the relative strength of the US economy, noting that growth last quarter reached 3%, which has reinforced investor confidence. He added, “Investors have generally become more bullish on the US compared to the last six months. Earlier in the year, the impression was that the US might underperform Europe or emerging markets. Now, the trend has shifted back to the US, which is also reflected in the continuous FII outflows from India.”
On India’s trade policy and its resistance to opening markets for the US, Singh explained, “India faced a choice—either buy more from the US or open its markets so the US could export more. India chose not to open up, effectively letting go of a $45 billion trade deficit. The trade will eventually balance out. India has consciously chosen to focus on its own strengths. The Indian economy was never truly open. Our remittances are $130 billion per year, while FDI is only $30–40 billion. When FDI is just one-third of remittances, it shows the economy is still relatively closed.”
Discussing investor strategies amid market turbulence, Singh remained cautious yet pragmatic. “I do not think India will face 20% tariffs at all; that is not the consensus view here. A 25% surcharge might go away if India is willing to negotiate, but the base 25% would likely stay. It is also clear that the Indian government prefers to keep the economy reasonably closed. This means the US will not have free access to Indian markets, and while this has a cost, it is not a significant one for India. That is the trade-off India has chosen.”
On market expectations and returns, Singh stressed long-term perspective: “These are the times where you just sit back and let the market do what it is doing. Last from 2020 to 2024 the returns were 20% CAGR on largecap Nifty and about 30% on mid and smallcap, that was abnormal. Those returns do not come consistently for a decade or so, so everybody knows that. Eventually the returns from Nifty 50 are 12% on a historic 30-year basis since 1994. Nifty 500 it is about 11%, so 1% less. And then half of this is inflation. “Indian investors should also note that about 6.5% of this 12% is actually purely because of inflation. Now that the inflation is down, nominal growth of India is about 9%, investors can expect 10% averaging. So, ultimately as long as that is the expectation 10% to 12%, India is doing strong, the economy is strong, just that now it is a low inflation economy which is good, so that is my broader message. But do not go all out on equity, keep at least 20-25% into debt instruments as well. For the past few years, I know the environment was like how there is nothing outside equity, but clearly now that is not the case,” he added.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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