Venkat Pasupuleti, Portfolio Manager at Dalton Investments, was recently quoted in Barron’s, discussing the Indian stock market. After President Trump’s “Independence Day” tariff turmoil, the Barron’s article notes that there is good news and bad news for India. On one side, Indian goods exported to the US accounted for just over 1% of India’s GDP in 2024 (one of the lowest among leading economies) and Washington has a strategic interest in keeping India friendly. On the other side, according to Pasupuleti, bad news could be coming from “second-order effects” as some of India’s biggest stocks are IT outsourcing companies, which are vulnerable to the negative effects of tariffs on their US customers. In addition, India will have to protect itself against China flooding the market with cheap exports, and the markets will be watching how Prime Minister Modi plays his cards, as he seeks to make deals, whilst also protecting two-thirds of the population that still live off the land in rural areas. Pasupuleti opines that open market access for super productive U.S. farmers would be “political suicide” for Modi. And that amidst the turmoil, Pasupuleti is “cautiously optimistic on more large-cap exposure.” Despite Modi’s quest to negotiate with Trump, Pasupuleti concludes that “we are heading into very, very choppy waters.”
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