Global brokerage CLSA has warned that India’s image as a geopolitical safe haven is under scrutiny following former U.S. President Donald Trump’s move to impose a 25% tariff on Indian exports and announce penalties on trade with Russia. The developments, according to CLSA, could challenge India’s delicate diplomatic balancing act between the two global powers and weigh on equity market sentiment.
CLSA noted that Indian equities may come under greater pressure due to the tariff-related uncertainty and potential decline in foreign institutional investor (FII) inflows driven by rising geopolitical instability.
The note pointed to energy-related vulnerabilities, highlighting that India’s reliance on Russian crude imports could face disruptions, which in turn threatens the margin profile of Indian refiners due to supply risks and pricing volatility.
On the sectoral front, exporters in electronics may see waning demand optimism from the U.S., while pharma and IT firms could come under tighter regulatory scrutiny amid shifting U.S. trade policies and broader scrutiny of overseas suppliers.
CLSA concluded that India’s strategic positioning between the U.S. and Russia is becoming increasingly difficult, and any further escalation in global trade tensions could hurt investor confidence and earnings visibility across several export-linked industries.
Disclaimer: The views expressed in this article are based on brokerage reports and do not constitute investment advice. Please consult your financial advisor before making any investment decisions.
