The Great Escape: As investors abandon US for greener pastures, Indian stocks stand to benefit

Subscribe to enjoy similar stories. US equity indices have been in the red for the past month as recession fears take centre-stage. Add to that the US President’s steep spending cuts and tariff hikes and it’s no wonder investors are getting jittery, preferring to shift their stock bets to other countries.

Although the bearish sentiment among US investors eased in March from levels in January or February, they remain at decadal highs, similar to the covid period, said Garima Kapoor, economist and executive vice president at Elara Securities India. Recession fears owing to policy uncertainties and Trump’s tariffs are adding to the valuation discomfort in the US markets, leading to about $15 billion in outflows from US equities, while the global ex-US markets attracted an inflow of about $4 billion in March, she said. A gradual rotation away from the US markets is beginning to pick up in favour of Europe and large emerging markets like China and India, she noted.

“India-dedicated inflows surged to a six-month high of $419 million. On the other hand, after a 13-week large inflow of $33 billion in the previous week, US funds saw $19 billion in redemptions last week," Kapoor said, citing Elara’s analysis of data from EPFR, a London-based provider of data on fund flows and asset allocations. The markets typically react negatively to uncertainty and Donald Trump’s comments are creating plenty of it right now.

This lack of clarity can delay business decisions, potentially leading to a slowdown in the US economy or even a recession. Trump is gearing up to drop his biggest round of tariffs on 2 April. He just made it clear that he won’t be playing favourites with his new reciprocal tariffs.