Worst of US tariff impact, uncertainty behind us: Prashant Khemka, founder & MD of WhiteOak Capital

The markets organized a one -week relief rally since the United States announced a 90 -day break in their reciprocal rates. Do you think that conerns related to the rate have completely decreased?

It is reasonable to believe, as we do, that the sausage of tariff impact and uncertainty are behind us. Shock and astonishment when reciprocal tariffs were announced. From now on you can only improve. There could be waves that follow, but the impact on the markets may not be remarkable. There may be some negative surprises after the 90 -day put. But in general, the market has already absorbed the risk of the event.

What would be the impact on India if the current tariff rates were maintained?

It is very unlikely that the final tariffs are as high as the initially announced tariffs. If they had to prevail, the impact of the manufacturing capacity that moved to the US would vary in industries and the country, and India will probably emerge as one of the main beneficiaries in relation to countries more or more. In the immediate term, tariffs can damage everyone’s demand, but it is unlikely to destroy long -term demand. Structural market share gain for Indian partners, manufacturing in part, can far exceed short -term pain.

What Indian industries could or be affected warningly?

Among the export nurses, the impact would be a function of the relative difference in the final tariffs and the competitiveness of India in specific industries compared to other nations. Bears garment garments, there are industries such as chemicals and engineering products, where India is already competitive enough to benefit at the expense of higher tariff countries such as China. For example, although we import many basic chemicals from China, we also compete with China in supplying intermediate and specialized chemicals to the United States and Europe. It is likely that these Indian chemical companies will benefit substantially if relative tariffs are higher in China. We already have news of some of these companies that are seeing an increase in research levels in recent days.

How do you see that commercial negotiations work between countries, including India, and its potential impact on companies?

I think India would be a relative winner, because with the experience of Trump’s first mandate, he is likely to rescue in China when dust is finally established in the front of the rates. Companies that depend excessively on Chinese manufacturing must be very concerned. Many of them need to unite business continuity plans to remain a group underway. This is where India becomes a relative beneficiary, since these companies rush to link with local actors and potentially establish manufacturing facilities over time.

How do you see FPI flows in Indian actions onwards?

Around three quarters of FPI’s investment in India are not in the dedicated assets of India, but rather an allocation within a fund of several countries. Therefore, it is natural that the funds continue to change weights depending on market performance and, sometimes, different narratives. Given the low performance of the US market, we do see that investors return to emerging and Indian markets. As India has recovered from its low performance at the beginning of the year, the stories of “high valuations of India” and “deceleration of economic growth” have decreased a bit. It is not surprising that we have begun to see a good interest among the FIIs to deploy money in dedicated funds from India.

What is your opinion on Indian valuations and corporate profits for fiscal year 2015?

In relation to the US, India is quoted with a discount of 5-10 percent. Even in relation to emerging markets, India seems to be below the average of the last 2-3 years. The valuations do not suggest any excess to both sides. Expectations for the market still remain, despite a slower growth in fiscal year 2015 or in the average digit. We see no reason to be the capacity of skeptical or Indian corporate sectors to offer a low -digit earning growth in the future from here.