Informist, Wednesday, Nov. 13, 2024

NEW DELHI – The huge flow of capital into the US financial markets in the aftermath of the Donald Trump-led Republican Party's win in the US General Election may not sustain for very long, Chief Economic Adviser to the Government V. Anantha Nageswaran said. "Because even before this election happened, the US stocks were somewhat elevated in valuation as the Federal Reserve is cutting interest rates."

The Indian government should not get "too sucked up" into the current volatility and overreact, Nageswaran said at India Ascends organised by The Economic Times. India's macroeconomic fundamentals are sound enough to withstand the volatility, the economist added.

While Trump's victory in the US election became apparent last week, the US Federal Open Market Committee has cut the policy rate by 75 basis points since September. As such, foreign portfolio investors have been showing greater preference for US stocks and the dollar has strengthened. The FPIs net sold Indian equities worth $10.9 billion in October, with the rupee falling to new lows in almost every session. The Indian unit touched a new lifetime low of 84.41 a dollar on Tuesday, but recovered to close at 84.39 a dollar on Wednesday.

"I think what is important is what happens when the (Trump) administration actually takes office in January and how soon they can implement some of the proposed policies," Nageswaran said. "We are doing our homework and preparing ourselves to anticipate what would come in terms of trade policies, etc. And then we will respond as and when they materialise."

There are anticipations that the Trump government may impose high tariffs on India. In the past, Trump has said that he may impose higher tariffs on countries which have a trade surplus with the US. Trump had also slammed India's tariff policy specifically in October and had called India "tariff king".

However, the Indian government will wait for the tariff actions to materialise before preempting any counter-measures, Nageswaran said. Besides, the government is more focussed on reforms related to deregulation for better development of the domestic industries, that may help shield the economy from the effects of external developments, as per Nageswaran.

In fact, the Economic Survey for 2024-25 (Apr-Mar) will be focussed on reforms related to deregulation that may help lower compliance burden and promote ease of doing business, Nageswaran said. The finance ministry will likely table the survey for the current year in Parliament on Jan 31. End

Reported by Krity Ambey

Edited by Vidhi Verma

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.