SIGNS OF A STORM BREWING. BUT......A disciplined approach for the long term will help navigate it.

THE RUSSIAN SAYING, “May you live in interesting times,” feels like a fitting lens to view global and Indian equity markets today.

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Nilesh Shah MD, Kotak Mahindra Asset Management Co. Ltd

The world is in constant flux, moving from one uncertainty to another, with geopolitical and geo-economic factors evolving at a dizzying pace. While domestic fundamentals, capital flows, and investor sentiment remain supportive of India’s markets, global headwinds create a complex backdrop.

The global financial landscape is fraught with vulnerabilities, particularly in the U.S., which remains the linchpin of the world economy. With $37 trillion in national debt, $8 trillion in debt-servicing costs (FY25), a $2 trillion fiscal deficit, and a $1 trillion current account deficit, the U.S. economy is skating on thin ice. The gradual erosion of the U.S. dollar's status as the world’s reserve currency adds to the complexity. These factors raise the spectre of a potential crisis reminiscent of the 2008 subprime meltdown. The transition in U.S. leadership, with President Donald Trump's policies shifting from ‘Make America Great Again’ (MAGA) to what some critics call ‘Trump Always Chickens Out’ (TACO), introduces further unpredictability. The Hindi phrase, Don ko samajhna mushkil hi nahi, na-mumkin hai (It’s not only difficult, but impossible to understand the Don), captures the uncertainty surrounding U.S. policy direction. Trump's policies, combined with economic vulnerabilities, are likely to push capital flows out of the U.S., into emerging markets, including India, where long-term growth prospects remain robust.