Mugunthan Siva from India Avenue Investment Management highlights the ongoing volatility in US-India tariff negotiations, noting that reciprocal tariffs now stand at 25% with an additional 25% imposed for using Russian energy. Siva points to a significant shift in H-1B visa patterns, where Amazon has overtaken Indian IT companies as the top user. Despite 50% of visa holders being Indian nationals, he views that Indian IT companies have evolved to hiring locally and focusing on higher-value practice areas like AI and cybersecurity, limiting their reliance on visas. The latest visa fee increase from around $5,000 to $100,000 is expected to impact US tech firms more than their Indian counterparts.
Siva observes that India is unlikely to bow to US pressure to stop importing Russian oil, highlighting that Europe and China import more Russian energy, yet face lower tariffs. Recent government measures such as GST rationalisation and increased income tax thresholds are seen as supportive policies. He notes that these tax changes began on 22 September and have already resulted in higher automobile sales, particularly in the two-wheeler segment.
Turning to Indian equities, Siva outlines that 2024 has been challenging for the market compared to previous years. He sees a normalisation in earnings growth, with the Nifty 50 lagging behind small and mid-cap stocks in terms of growth, but trading at a lower valuation. The India Avenue Equity Fund Active ETF has delivered over 6% in six months, supported by strong domestic investor inflows.
