Modi US Visit: Will stock markets bounce back after Modi-Trump meeting?

Modi US Visit: Market experts believe the current stock market crash largely prices-in any negative news on Trump's tariffs on India

Modi US visit, Modi-Trump meeting: The highly anticipated meeting between India Prime Minister Narendra Modi and US President Donald Trump is set to take place today, February 13, 2025.

 

The meeting, as per analysts, is being keenly watched by stock market investors as it comes in the backdrop of Trump’s vow to levy reciprocal tariffs "on all countries" taxing US goods.

 

Stock market, they said, is looking forward to a fruitful Modi-Trump meeting during the former’s US visit, where trade relations are expected to be the focal point. Lowering tariffs or a larger common trade accord is something that the markets will keenly track. 

  

 

"The markets are closely awaiting to see if India and the US can strike a trade negotiation with respect to tariffs. PM Modi has been amongst the select few foreign leaders visiting the US. Even during their telephonic conversations, both leaders committed to a trusted partnership between the two countries," highlighted Pawan Parakh, fund manager at Geojit Financial Services.

Modi-Trump meeting: Agenda, market expectations

Stocks markets have been on the edge ahead of PM Modi’s US visit. Over the past six days, the BSE Sensex index has declined 2,412 points or 3.07 per cent, while the Nifty50 has dropped 694 points or 2.92 per cent as it discounted Donald Trump's "reciprocal" tariff announcements. 

 

According to analysts, including global brokerages like Nomura and Morgan Stanley, India is among the nations that is most exposed to Trump’s "reciprocal" or "tit-for-tat" tariffs. 

As per Nomura, India has much higher relative tariff rates on Indian goods exported to the US, and is exposed to high reciprocal tariffs among Asian peers.

 

India, it estimated, levies 9.5 per cent weighted average effective tariff on US exports versus a 3-per cent tariff rate on India’s exports to the US.

 

Notably, the White House said on Wednesday that US President Donald Trump may announce "reciprocal tariffs" before he meets PM Modi. The Trump administration has, previously, pointed out that India has high tariffs that lock out US imports. 

 

Against this, market watchers believe Street will eye Modi administration will handle Trump's likely heavy demands and reduce his negotiation powers.

 

"India is strategically important for the US' Indo-Pacific aspirations. Thus, the probability of trade deal negotiations appears high. India has proactively taken steps, such as scaling down duties on certain US imports and taking back illegal immigrants, to indicate that it is willing to engage into a dialogue with the US administration, which has been taken positively. This significantly reduces the chances of any unilateral US tariffs on India," said Pawan Parakh of Geojit Financial Services. 

 

That apart, Indo-US strategic cooperation in the energy and technology sectors; more room for bilateral cooperation beyond trade; and clarity on H1-B visas for Indian IT companies and less stringent compliances for India pharma companies are some of the areas that markets will actively track during the meeting, analysts said.

 

Modi in US: What it means for stock markets?

Market experts believe the current drawdown in the stock markets largely prices-in any negative news on the tariff front.

 

If India can get into negotiations, the markets may see some relief rally in the near-term. However, fresh tariffs against India may dent market sentiment further, though the quantum of the same would be judged by the tariff’s fine print, they said.

 

"A positive outcome highlighting progress on trade concessions, reduced tariff risks, and a commitment to deepen economic ties could boost investor confidence, particularly in export-driven sectors. Moreover, if the discussions reaffirm the strong US-India partnership without immediate policy shifts, markets may remain stable. However, any new concerns over tariffs could lead to temporary fluctuations, impacting key sectors such as IT, textiles, and auto components," said an independent market analyst who didn't wish to be identified.