To The Moon

On Monday evening, Donald Trump announced a new 18% tariff rate on Indian goods, lower than the 20% imposed on Vietnam and Bangladesh. Compared with the punitive tariffs of up to 50% introduced in August last year, the move is a clear positive for India’s labor-intensive export sectors, including apparel, footwear, and jewelry.

On the back of this policy adjustment, Indian equities rallied across the board. Trump said the decision was made after a phone call with Indian Prime Minister Narendra Modi. Following the announcement, the NSE Nifty 50 jumped as much as 2.85% intraday, while the S&P BSE Sensex 30 also rose 2.83%.

India-related ETFs also saw gains: VWO, the largest dollar-denominated ETF, rose 0.5% daily; INDA and EPI gained 3.0%; FLIN increased 2.6%; and SMIN climbed 3.4%.

Previously, sharp hikes in U.S. tariffs had caused orders in labor-intensive industries to stall, weighing on manufacturing sentiment, with trade negotiations dragging on for months. This latest tariff cut is widely seen as a key turning point.

S.C. Ralhan, President of the Federation of Indian Export Organisations, said the reduction opens an important window of opportunity for Indian exporters, especially small and medium-sized enterprises, spanning sectors such as engineering goods, textiles, leather, and jewelry.

Turning back to India’s two main equity benchmarks:

From end-1990 to early 2026, the NIFTY 50 delivered a price CAGR of about 13.2% (excluding dividends). Following today’s tariff adjustment, gains were concentrated in higher-beta financial and conglomerate names: Adani Enterprises rose 10.68%, Jio Financial Services gained 7.56%, Adani Ports climbed 7.38%, Bajaj Finance advanced 5.64%, and IndiGo rose 5.11%. Over more than three decades, India’s core blue-chip market has traced a high-volatility yet highly compounding long-term uptrend.

Structurally, deep drawdowns occurred in 2008 and 2020, driven by the subprime crisis and the pandemic, respectively. Yet after each selloff, the index recovered on a higher base, reinforcing confidence among global long-term allocators to maintain and increase exposure to India.

Measured from late 1979 to early 2026, the BSE Sensex delivered a price CAGR of around 15% per year (also excluding dividends). Gains were driven jointly by automobiles, industrial capital goods, and financial heavyweights, with Maruti Suzuki, Larsen & Toubro, Adani Ports, as well as HDFC Bank and ICICI Bank, making the most visible contributions to index performance.

This outcome is highly similar to the NIFTY 50, but because the Sensex has a more concentrated basket (30 constituents), its average price appreciation has been relatively higher.

$Vanguard FTSE Emerging Markets ETF(VWO)$ leads by a wide margin with total assets of approximately $113 billion and a management fee of just 0.02%. It has seen net inflows of about $20.5 billion year-to-date. However, it's important to note that VWO is not a pure-play India ETF but rather covers the entire emerging markets, with India accounting for only 18.9% of its weighting. It is more suitable for overall emerging market allocation rather than a standalone bet on India.

Among pure-play broad-based India ETFs, $iShares MSCI India ETF(INDA)$ remains the largest by scale, with total assets of approximately $9.1 billion and an expense ratio of 0.65%. However, it has experienced net outflows of about $319 million year-to-date.

$Franklin FTSE India ETF(FLIN)$ has assets under management of approximately $2.8 billion, significantly smaller than INDA. However, its key advantage lies in its management fee of just 0.19%, making it one of the lowest-cost products among mainstream Indian ETFs. This year, it has actually seen net inflows of about $76 million, attracting more long-term strategic capital.

From the perspective of strategy-based and style-based products, $WisdomTree India Earnings Fund(EPI)$ assets under management total approximately $2.6 billion with a management fee of 0.83%, which is relatively high. This year, it has experienced net outflows of about $273 million. $iShares MSCI India Small-Cap ETF(SMIN)$ assets amount to roughly $660 million with a management fee of 0.74%, also seeing net outflows of approximately $335 million. This indicates that the small-cap style has not received sustained incremental capital support within the year.