Indian markets rebound, become first to erase Trump tariff losses

India has emerged as the first country to fully recover stock market losses caused by US President Donald Trump’s tariff announcement. The benchmark Nifty 50 index on the National Stock Exchange surged by 2.4% during Tuesday's trading in Mumbai, returning to levels last seen on April 2—the day Trump signed the executive order on reciprocal tariffs.

Also read: US tariffs on Chinese goods may burden consumers amid high import dependence 

This rally came after a long holiday weekend in India and marked a significant turnaround following a nearly 10% slump in the index over the past two quarters. Global investor confidence has been boosted by India's relatively resilient market dynamics amid escalating US-China trade tensions.

While Trump's tariffs remain paused for most countries except China, fears of a global slowdown have rattled global markets. However, India’s vast domestic investor base and rising manufacturing capabilities have helped cushion the impact. Unlike many nations, India has limited exposure to Chinese investments and a smaller share in US imports—only 2.7% compared to China’s 14%.

Investor optimism has also been supported by proactive policy steps. The Reserve Bank of India has reduced interest rates, and falling global crude prices have further improved sentiment, benefiting India, a major oil importer.

With discussions ongoing for a favorable India-US trade agreement and increasing global supply chain diversification away from China, India is being viewed as a stable and promising investment hub.