INSUBCONTINENT EXCLUSIVE:
New Delhi: Two Tweets from US President Donald Trump have left financial markets trembling again!
A surprise threat from Trump to impose
fresh tariffs on China just when a large Chinese delegation was readying to head to the US for trade talks sent stocks and crude oil prices
tumbling on Monday morning.
But Indian market was an exception, as a drop in crude prices helped offset the negativity.
At the time of
writing of this report, the BSE Sensex traded with a 300-point cut after slumping 450 points earlier in the day, while Nifty50 was back
above 11,600 level.
This wain contrast to the selloff seen among other Asian markets
India has managed to narrow its own trade deficit with China ever since the onset of the US-China trade war
Analysts said if this and softer crude price trends continue, they might favour the Indian market going ahead
crude oil in the near term
Monday morning, Brent crude oil futures traded $1.51 per barrel, or 2.1 per cent, down from their last close at $69.34 per barrel
Technical charts suggest Brent is all set to break the support at $68.74 a barrel and fall towards the next support at $67.01.
India meets
over 80 per cent of its oil demand through imports
A fall in crude oil prices decreases dollar demand, which add strength to the rupee-dollar exchange rate
A rise in the rupee pushes up dollar returns for foreign investors, making their India investment attractive.
Recent trade data from the US
Census Bureau suggests India has outperformed the moderate gains expected from a US-China trade war, UBS said in a note.
The foreign
brokerage argued that even if the trade issue settles down in the near term with a truce between the two countries, it may still act as an
the scale of China's manufacturing, India is potentially better placed to absorb any meaningful shift
While the scale of skilled labour required is present, even in Vietnam, the sheer scale in India may ensure competitive wages even if there
The scale of power generation and, most importantly, the attractive big local market are clear advantages for India compared with its peers
Clearly, if these tariffs go through, they almost certainly would do, because they would have no reason not to have an escalating trade
"India would be a relative beneficiary of this as there is limited trade links between China and India
There will be a sharply weaker Chinese economy, compared with what we had anticipated prior to this latest extraordinary tweet, probably
The risk for EMs from all of this is that the dollar may rally and that could hurt all emerging markets
So, India would be hurt by this, but it would be hurt a lot less," Dennis said.
China can retaliate, said Seth R Freeman, GlassRatner
"There are talks about cancelling the meetings entirely -- the leadership in China may project strength to its own people and to not create
perceptions that the Trump administration can push China around," Freeman told ETNow.