In a significant development that could impact Indo-US trade relations, the United States has announced plans to raise tariffs on India. The proposed trade action is reportedly in response to India's continued imports of Russian oil.

Tariff Increase Looms

The US decision to potentially increase tariffs on Indian goods marks a new chapter in the complex geopolitical landscape surrounding Russia's oil exports. This move underscores the growing tensions between Western nations and countries that continue to purchase Russian oil amid ongoing global conflicts.

India's Oil Imports Under Scrutiny

India, one of the world's largest oil importers, has been increasing its purchases of Russian crude oil in recent months. This strategy has allowed India to secure energy supplies at discounted rates, but it has now drawn the ire of the United States, leading to the threat of punitive trade measures.

Potential Impact on Indo-US Trade

The proposed tariff increases could have far-reaching consequences for Indo-US trade relations. India and the United States have been working to strengthen their economic ties in recent years, with bilateral trade in goods and services reaching significant levels. Any new tariffs could potentially disrupt this growing economic partnership.

Global Oil Market Dynamics

This development highlights the complex interplay between global oil markets, geopolitics, and international trade. As countries navigate their energy needs and diplomatic relationships, actions like these proposed tariffs demonstrate the delicate balance that must be maintained.

Next Steps

It remains to be seen how the Indian government will respond to this announcement and what specific tariffs the United States plans to implement. The situation is likely to be closely watched by international trade experts, diplomats, and businesses with interests in both countries.

As this story develops, further details on the proposed tariffs, their potential impact on specific industries, and the diplomatic efforts to address this issue are expected to emerge.

In a surprising turn of events, India has fallen from being fund managers' top Asian stock market choice to their least preferred in just three months, according to a recent Bank of America (BofA) survey. This shift in sentiment reflects growing concerns over potential trade tensions and market valuations.

Survey Highlights

The BofA survey, which included 99 panelists managing $183 billion in assets, revealed a significant change in fund managers' preferences:

• 30% of respondents are now underweight on India
• Thailand follows with 20% underweight
• Malaysia stands at 10% underweight
• Japan has emerged as the most favored market, followed by China

This marks a stark reversal from May's survey results when India had displaced Japan as the most favored market among fund managers.

Factors Influencing the Shift

Several factors have contributed to this dramatic change in investor sentiment:

1. Trade Concerns: Investors are worried about the potential impact of Trump's decision to impose 50% tariffs on Indian goods as a penalty for the country's Russian oil purchases.
2. Weak Earnings: Recent corporate performance has not met investor expectations.
3. Expensive Valuations: Indian stocks are perceived as overvalued compared to other Asian markets.

Market Impact

The shift in sentiment has had tangible effects on the Indian stock market:

• Global funds have withdrawn approximately $4.00 billion from Indian shares this quarter.
• Indian stocks have experienced their worst weekly losing streak since the Covid-19 pandemic.
• Indian equities have underperformed major Asian peers this year.
• Chinese shares outperformed Indian stocks by about eight percentage points in July alone.

Domestic Support

Despite the foreign outflows, domestic institutions and retail investors have increased their purchases:

• Indian mutual funds recorded a net inflow of 427.00 billion rupees ($4.90 billion) in July.

This domestic support has helped to partially offset the impact of foreign selling.

Outlook

While the current sentiment appears bearish, it's important to note that market preferences can be cyclical. Investors will be closely watching for any developments in trade relations, corporate earnings, and overall economic indicators that could influence future market performance.

As always, investors are advised to conduct thorough research and consider their risk tolerance before making investment decisions based on market sentiment shifts.