India is relatively immune to the tariff regime, says Manulife Investments

India’s stock market is balancing its domestic economic strengths with pressures from global trade shifts, according to Marc Franklin, Deputy Head of Multi Asset Solutions, Asia at Manulife Investments.

“There was one school of thought saying that India is very much a domestically driven economy”, and therefore less exposed to global tariff changes, Franklin said. However, he added that the US push for India to open its domestic market to foreign players and imports “has perhaps been a bit of a headwind for Indian equity market sentiment” in recent weeks.

Also Read | Allspring’s Prashant Paroda sees room for Indian market rebound if tariff issue eases

Franklin said a macroeconomic boost is needed to attract domestic and foreign investment into equities. While lower consumer price index (CPI) and wholesale price index (WPI) inflation give policymakers scope to cut interest rates, the Reserve Bank of India (RBI) remains cautious as much of the disinflation is food-driven and could reverse quickly. “The more they feel able to cut rates aggressively, the more it has a chance to reinvigorate credit demand,” he said. Loan growth, however, is slower than historical averages, contributing to banks lagging behind the market.

Also Read | ING chief economist sees room for sharp Fed cuts as US growth slows

On geopolitics, Franklin pointed to Russia-Ukraine talks as another factor influencing investor sentiment. A positive outcome could lift global risk appetite and provide “a bit of a disinflationary tailwind” for some assets, while a lack of progress could have the opposite effect.

For the full interview, watch the accompanying video

Catch all the latest updates from the stock market here