Indian benchmark indices Sensex and Nifty faced a severe selling pressure on Friday as the renewed Trump tariffs dented the sentiment on Dalal Street along with weakness in the Indian rupee, consistent FIIs and muted earnings by India Inc. Investors lost more than Rs 3.53 lakh crore from their kitty due to the ongoing carnage.
The latest volatility and selling pressure raised a question if US stocks are better buy compared to the Indian counterparts. Market experts have a divided view on this point, but believe that short-term sentiments for Indian equities remain jittered. However, they are positive on the long-term story for the Indian equities.
Market participants believe that the escalation of trade tensions between the US and India has increased the risk profile for Indian equities. Donald Trump’s announcement of an additional 25 per cent tariff on Indian exports in retaliation for India’s continued purchase of Russian oil, has increased investor concerns amidst consistent foreign outflows and a weakening rupee.
The measures target sectors, which make up a significant share of India’s exports to the US. With the US being one of India’s largest trading partners, the move could directly put pressure on corporate earnings and weigh on GDP growth in the short term. The Indian rupee’s slide adds a further concern for overseas investors, eroding returns in dollar terms, said Ross Maxwell, Global Strategy Lead at VT Markets.
However, India’s long-term growth story, driven by domestic demand, increasing middle class and infrastructure expansion remains intact. In the short- term, the tariff shock and currency volatility suggest a cautious stance on Indian equities, and looks positively to the relative safety of US markets, he said.
Experts argue that the US equities, however, buoyed by a positive earnings season, particularly big tech and domestically focused companies remain insulated from direct tariff fallout and continue to benefit from deep market liquidity, diversified earnings bases, and safe-haven inflows during periods of global uncertainty.
US stocks appear relatively safer amid Trump’s tariff escalation, though neither market is immune to disruption. Trump’s tariff on Indian imports directly pressures Indian exporters, IT services, and pharma companies, creating immediate headwinds for Indian equities, said Viram Shah, Co-Founder and CEO at Vested Finance
“US markets benefit from being the tariff imposer rather than receiver, avoiding direct export disruptions. However, tariffs act as inflationary taxes on US consumers and businesses, potentially pressuring corporate margins. The gold rally to new highs reflects broader uncertainty affecting both markets,” Shah adds.
“While there are still concerns over the US economy, its equity markets are better positioned to weather geopolitical shocks compared to emerging markets, market experts say. For risk-averse investors, US stocks currently offer a more stable environment amid heightened trade tensions,” Maxwell from VT Markets added.
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