The Government of India is one of the six countries out of 180, which has given concessions on US imports, a step that is likely to look at US President Donald Trump positively. Investors are closely monitoring bilateral trade talks between the US and the European Union, China and Japan; The results of these discussions are expected to significantly affect markets.
Each major nation now tries to engage in bilateral trade talks with the US and each other, suggests that future global trade agreements can take less weight. In contrast, bilateral contracts are likely to obtain more value.
The relatively more straightforward market environment after epidemics is characterized by low uncertainty, finished, and the markets are now studying for global changes. Market instability is at its highest level since epidemic, making the forecasts very uncertain.
Further earnings
Corporate India and the world many businesses are slowing down their expansion plans for new offices and factories. This recession is contributing to slowing the development of employment, making consumers feeling insecure. In response, the Government of India has increased its infrastructure on roads, bridges and dams to support development and improve its physical infrastructure. Investment of such infrastructure is important to attract foreign investment in India and reduce bottlenecks in development expenses.
American corporate income for S&P 500 is estimated to be slow from 14% to 11%. Meanwhile, India’s earnings are expected to be reduced by 8–10%, which is below the pre-year-year estimates. However, the growth rate may increase quickly if the European Union and/or China reach tariff agreements in the next three months. The US inflation rate for March is 2.4%, which is less than expected and has been seen positively.
However, Fed Chair, Georome Powell indicated that tariff uncertainty can lead to an unexpected inflation approach. As the trade talks begin, the European Union is expected to cut interest rates soon to reduce economic pressures. America can also consider the following suit; However, fed is forced by data, which may not be rapidly adapted to the current situation.
US-India bilateral agreement in focus
Sources of the Government of India indicate a 90-day break on tariffs, there is still a place with 10% tariff during this period. India’s Commerce Minister Piyush Goel is leading the team working with the US government to finalize a bilateral agreement. A series of meetings are expected to begin in the coming month.
Domestic, the Reserve Bank of India (RBI) interest rate cuts and development trends are favorable for equity markets. Low interest rates reduce corporate working capital expenses, support government infrastructure expenses, and consumer home loans reduce the cost of lending. As the interest rate and oil prices fall, India’s import bill is expected to fall, which will help less inflation. This development will also stabilize the Indian rupee against the US dollar.
Economists estimate slow growth with high inflation; However, uncertain time for successful dialogues can give rise to widely different predictions. Low trump tariffs and low interest rates create a favorable position for India’s economic growth. We are ready for productive resolutions that will serve as a catalyst for India’s financial advancement and promising market returns. Asha is really a powerful thing.
(The author is the Chief Investment Officer- Equities, LGT Dhan)
Disclaimer: This story is only for educational purposes. The above views and recommendations are of individual analysts or broking companies, not Mint. We recommend investors to investigate with certified experts before taking any investment decisions.
