India Outshines Global Peers Following Trump’s Tariff Shock
India has emerged as the standout performer in global equity markets following U.S. President Donald Trump’s surprise announcement of sweeping tariffs on April 2, 2025. While global markets have broadly tumbled, India has defied the downtrend, registering net gains and reaffirming investor faith in its macroeconomic fundamentals and policy stability.
The benchmark Sensex and Nifty indices have climbed 2.5% and 2.2% respectively in rupee terms since the announcement, and over 2% in U.S. dollar terms, according to Bloomberg data. Notably, this makes India the only market among 16 major global economies to not only recover all post-announcement losses but to move above pre-tariff levels.
This week’s rally has been particularly robust. The Nifty surged over 4% and marked a 6.5% rise over the past five trading sessions—its best five-day performance in months. In stark contrast, key global indices such as the S&P 500 (-1.4%), Dow Jones (-6%), CAC 40 (-7.5%), DAX (-5.4%), and Hang Seng (-7.8%) continue to trade in negative territory, weighed down by fears of a prolonged trade conflict and its implications on global supply chains.
Highlights
Nifty and Sensex post 2%+ gains since April 2 in both rupee and dollar terms.
India is the only market among 16 tracked globally to fully erase post-tariff losses.
Global markets remain broadly negative: Dow (-6%), S&P 500 (-7%), CAC 40 (-7.5%), Hang Seng (-7.8%).
Strategic Trade Diplomacy and Oil Price Relief Bolster India’s Market Confidence
One of the principal reasons for India’s exceptional performance is its strategic diplomatic positioning. Unlike other economies that retaliated with reciprocal tariffs or harsh rhetoric, India opted for a more measured response—eschewing confrontation and quietly engaging in bilateral talks with the U.S. This stance has started to pay dividends, with investors anticipating that India could soon finalize a trade pact with Washington.
“India never went down the road of confrontation. No reciprocal tariffs, no public criticism,” noted Hiren Ved, CIO of Alchemy Capital. “Instead, India has been ahead in talks and could be among the first nations with which the U.S. signs a trade pact.”
Supporting this narrative, India has proactively lowered import tariffs on several high-profile U.S. goods, including high-end motorcycles (from 50% to 30%), bourbon whiskey (from 150% to 100%), and telecom gear (from 20% to 10%). These steps have been viewed as significant confidence-building measures that could accelerate trade negotiations.
The recent decline in global crude oil prices has also served as a tailwind for Indian equities. With oil being a major import, the fall in prices is expected to ease inflationary pressures and narrow the trade deficit—both critical indicators for India’s macroeconomic stability. Together with robust foreign exchange reserves and prudent fiscal management, this has helped the rupee stay relatively stable amid global currency volatility.
Highlights
India lowers tariffs on select U.S. goods to foster goodwill and fast-track a trade pact.
Falling crude prices reduce inflation risk and improve trade balance outlook.
Diplomatic tact and macro stability increase India’s appeal to global investors.
Domestic Demand Resilience and Earnings Outlook Reinforce Bullish Sentiment
India’s relative insulation from the tariff war is also rooted in its domestic consumption-led economic model, which is less reliant on exports compared to its Asian peers. Economies like China, Taiwan, and South Korea—highly dependent on global supply chains—have suffered disproportionately amid the ongoing trade turbulence. For instance, Taiwan’s equity index has tumbled 8.4%, the CSI 300 by 3.9%, and Japan’s Nikkei by 3.8%.
In contrast, India’s strong household consumption base provides a cushion against external shocks. Early projections for the June quarter corporate earnings are fueling further optimism, with analysts expecting a 2–3% year-on-year growth—a notable uptick amid global uncertainty.
This domestic resilience, coupled with favorable liquidity conditions and continued foreign inflows, has underpinned India’s bullish equity sentiment. The divergence from global trends underscores investor belief that India remains a growth outlier even during international upheavals.
Highlights
India’s domestic consumption-led model shields it from global trade tensions.
Projected 2–3% earnings growth in Q1 FY26 adds fuel to equity momentum.
Strong household demand and foreign investor inflows strengthen market resilience.
Global Indices Struggle While India Sets New Post-Tariff Highs
India’s performance stands in stark contrast to the global equity landscape, which continues to reel from the fallout of Trump’s April 2 tariff decision. The S&P 500 and Dow have each shed over 6%, with European markets suffering comparable losses. Even traditionally resilient Asian indices have failed to escape the turmoil, with China’s Hang Seng and Taiwan’s bourses leading the regional declines.
Among Southeast Asian markets, the Philippines (-1.8%), Jakarta (-1.7%), and New Zealand’s NZX 50 (-2.1%) have all recorded modest declines, reflecting broader risk aversion. Brazil’s Ibovespa has dipped by 2.2%, highlighting the global nature of the market correction.
India’s deviation from this trajectory reinforces its position as an investment safe haven in emerging markets, particularly amid geopolitical instability and a realignment of global trade dynamics.
Highlights
S&P 500 (-7%), Dow Jones (-6%), CAC 40 (-7.5%), DAX (-5.4%) reflect global market pain.
Asian peers such as Hang Seng (-7.8%) and Taiwan (-8.4%) hit hard by supply chain fears.
India’s divergence underlines its appeal as a relatively safer investment in EM basket.
