Prime Minister Narendra Modi met Chinese President Xi Jinping in Tianjin on August 31, and the timing couldn’t have been more 0 Indian stocks underperforming and global funds pulling back, the diplomatic handshake between the two leaders signaled something larger than symbolic 1 came as part of a broader push that includes domestic tax cuts and central bank rate easing, offering new reasons for investors to reconsider their positions in 2 to Bloomberg, the meeting focused on border issues, restarting direct flights, and growing trade, three areas where any progress could directly affect market 3 the 4 President Donald Trump continues to enforce 50% reciprocal tariffs on India, this new diplomatic tone with China is being read by market watchers as a possible shift in regional 5 combination of improved China relations and internal economic stimulus is being interpreted by bulls as enough to neutralize Trump’s aggressive trade 6 year-to-date performance says a lot: the Nifty 50 has risen just 4.6%, while the MSCI Emerging Markets Index is up 19%.
On top of that, global investors have pulled out $16 billion from Indian stocks this year 7 may benefit more than China from this new alignment The imbalance in trade between the two countries remains 8 the fiscal year ending March 2025, India exported $14.2 billion to China while importing $113.5 9 gap gives India more to gain if trade flows 10 say this could create opportunities in manufacturing, energy tech, and capital inflows, three areas where China has scale and India has 11 Duan, senior investment strategist at RBC Wealth Management in Hong Kong, said, “Improved Sino-Indian relations may benefit the Indian stock market more significantly, as India is currently the one facing the 50% tariff 12 Chinese stocks, the impact is likely to be indirect and marginal at best, making it difficult to drive a major market trend.” Some fund managers are skeptical that anything real will come from 13 Gala, who manages $2.3 billion at Federated Hermes in London, said, “It’s too early to tell which sectors or industries will benefit, as no concrete policies have been announced.” Gala warned that the effect on markets might be temporary unless actual trade reforms are put in place.
Still, others are paying attention to the broader 14 Gubbi, co-founder at Marcellus Investment Managers in Mumbai, said , “The decline in allocation to India in EM portfolios we have seen in recent months could be arrested or potentially reversed.” He believes the effects of the tariffs may “get offset by this boost to Indian economic growth and eventual earnings recovery.” Tax cuts and rate easing fuel more investor interest Alongside the foreign policy reset, domestic economic support is also playing a 15 Malhotra, Governor of the Reserve Bank of India, confirmed that the central bank remains in a rate-cutting 16 February, the RBI has lowered the benchmark rate by 100 basis points to stimulate sectors hit by tariffs and slowing 17 another action designed to support consumption, a panel of state and federal finance ministers approved cuts to goods and services tax on nearly 400 product 18 items make up about 16% of India’s consumer-price 19 the announcement, shares in consumer-facing firms and carmakers moved 20 Wu, a cross-asset strategist at VanEck Associates in Sydney, tied the two developments together.
“The warming of China-India ties can be a positive factor, while the tax cuts are also a structural tailwind for Indian equities,” she 21 pointed out that India could benefit from forming a new economic axis with China and Russia in the face of Trump’s aggressive tariffs . “The China-Russia-India block is in formation now amid historic tariffs, and could help India to increase its resilience against US tariff aggression,” she 22 Difference Wire helps crypto brands break through and dominate headlines fast
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