US President Donald Trump’s tariff threats have been keeping stock markets on tenterhooks in the past couple of months. However, A Balasubramanian, managing director and CEO, Aditya Birla Sun Life AMC, believes that foreign portfolio investors should make a comeback into Indian markets from June. He tells Ananya Grover that while the current volatility will continue, the incremental impact will be restricted. Excerpts:
The current volatility in the market is worrying. How do you read the situation?
In India, the entire market, including us, is of the opinion that valuations remain stretched. The reasons are lack of government spending in the first half of this year, leading to a fall in the gross domestic product; the Reserve Bank of India tightening the credit growth, adding to the slowdown in the overall growth momentum; and global volatility, which wasn’t there for quite some time has come back after Trump started making a lot of noise over tariffs. While nothing concrete has emerged so far, the market does not like uncertainty, especially on policy framework, growth uncertainty and decision making. The current volatility will stay, but given the fact that the market has corrected quite a lot, the incremental impact of uncertainty would get restricted.
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How will Trump tariff decisions impact the market?
The change in the tariff could impact countries differently because of the interdependency. Given the fact that the US is dependent on almost every country, any change will also impact the US economy. However, given that the US is a large economy and has been the driver of the global growth, it will have some pluses. This could lead to a change in price levels. If the roaring US growth doesn’t come, there is a high probability of India turning out to be a little better, as growth aspirations remain high and a lot of moving parts are in place, including capital expenditure by the government, private capex coming in, make goods for Indian consumers first and large population.
The Budget announcement to drive the boost in consumption is a big decision. Therefore, from Indian market’s view point, we should look at two-three years of bull period. Having said that, 2025 will be uncertain, but incrementally,
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