Tariffs hurt, but expected rate cuts and cheap oil give Indian market a shot at outperformance

India’s stock market has had a tough year, but things could be looking up. Falling oil prices, some policy breathing space at home, and potential rate cuts may give investors reasons to be more optimistic, says Geoffrey Dennis, independent emerging markets commentator.“I would bet between now and the end of the year… India will be a modest outperformer,” Dennis said.

India has been under pressure after Washington slapped 50% tariffs on its exports. Dennis called the move “a swinging level of tariffs that’s been imposed on India for, as I say, essentially, non-market reasons.”

Still, he sees a change in the mood. “We are seeing a bit of a recovery now, although a lot of this will clearly depend on where global markets go,” Dennis said. Lower crude, possible cuts in goods and services tax (GST), and room for the Reserve Bank of India to trim interest rates are all positives.West Texas Intermediate crude was near $63 a barrel after dropping 1.7% on August 19, while Brent slipped below $66. Prices have been under pressure on expectations of a supply glut later in 2025 as OPEC+ brings back output and trade uncertainties weigh on demand.
The US Federal Reserve could also tilt the balance. “I think we’re looking at 25, possibly 50 basis points of cut,” Dennis said, adding he expects cuts “at some point between now and the end of the year.”The next US Federal Open Market Committee (FOMC) meeting is set for September 16-17, and futures data from the CME FedWatch Tool indicates traders see nearly an 85% chance of a rate cut.

Also Read: Revenue loss from GST cuts manageable, may lower inflation by up to 45 bps: SBI economist

While valuations remain high, which makes earnings growth crucial, Dennis said India’s long-term story remains resilient.

For the entire interview, watch the accompanying video

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