Investing.com – UBS Group AG (NYSE:) advises investors to short the Indian rupee and reduce their holdings in the country's stocks. The Swiss banking institute's research department suggests that India's $4 trillion economy is experiencing a structural slowdown. This decline is not due to cyclical factors such as changes in oil prices or sluggish government spending.
The research group cites a long-term decline in credit growth, foreign direct investment, export competitiveness, and employability as reasons for the decline. These factors are expected to decrease further after Donald Trump assumes the US presidency.
Manik Narain, head of Crisis Market strategy research at UBS in London, challenges the conventional wisdom that India is relatively immune to the impact of Trump's policies compared to other emerging markets. .
He emphasizes that a prolonged period of high US output could pose a challenge to India's growth. This is due to India's high debt-service-to-income ratio, one of the highest among major emerging markets.
Over the past month, Indian stocks have seen nearly $500 billion removed from their market value. This marks the worst start to a year since 2016, according to MSCI Inc (NYSE:).'s country index. The Indian rupee has also hit consecutive lows against the US dollar, making it the worst performing currency in Asia.
Additionally, India's bonds are experiencing the fastest outflow since 2020, as enthusiasm for inclusion in global bond listings wanes.
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