Help us understand how you’re reading the US markets right now. We’ve just heard from Treasury Secretary Bessent, who said that most trade deals are largely done. But alongside that, we also have comments from the Atlanta Fed President, Raphael Bostic, suggesting that the economy is likely to slow down. Do you believe these concerns could weigh heavily on the markets going forward? Given the resilience the US markets have shown so far, could this create some downside risks?
Matt Orton: A lot of the concerns around US economic growth are already well understood by the market. We’ve been thinking about a potential slowdown since April 2nd, but so far, the data has actually surprised to the upside. I’ve remained constructive on both the economy and the markets.
From what I’ve seen during the earnings season — and ultimately that’s what drives market direction — we’ve had broadly strong earnings, especially from the technology and communication services sectors. Whether the economy slows or grows, these long-term secular growth areas tend to do well. So it’s a bit of a “heads I win, tails you lose” situation: what’s been driving the market remains firmly in place, and we’re likely to see that appreciation continue.
I would urge investors to look beyond the current sideways movement or consolidation — which is healthy after hitting 10 all-time highs this year — and use any meaningful downside, if it occurs, as an opportunity. Make sure you’re positioned in long-term, durable growth themes like artificial intelligence, capex, and reshoring — areas we’ve discussed previously.
It’s also an important day globally, with Donald Trump’s reciprocal tariffs taking effect today. However, he has now ruled out any room for negotiation with India until the tariff issue is resolved. How are you reading into that? The street’s belief was that the high tariffs were a pressure tactic, giving room for negotiation. Now that he seems to be closing the door on talks, how do you think this rhetoric might play out?
Matt Orton: I don’t think anything is ever completely ruled out with Donald Trump. He’s a dealmaker. When there’s a deal to be made, he’ll take it — especially with a country like India, which is strategically important to the United States. Its location between China and Russia — two of the US’s key adversaries — makes India a key player.
I think Trump wants to strike a deal with India and is just playing hard to get right now. Russian oil may also be used as a bargaining chip — perhaps more to show Vladimir Putin that Trump is serious about supporting Ukraine. Doing that with China is harder due to the regime’s volatility and the risk of escalating tariffs, considering how deeply interconnected the two economies are.
So yes, there are many chess pieces in play right now. One never truly knows what Trump is thinking, but given India’s strategic importance — economically and geopolitically — I believe a deal is still on the table. Much of it may hinge on how US-Russia negotiations evolve in the near future.
Just shifting to the Indian markets — what’s your take on the incessant FII (Foreign Institutional Investor) selling? We’ve seen consistent outflows across nearly 17 trading sessions in July. Is the bigger concern tariffs, or is it about domestic growth?
Matt Orton: There are several factors at play. Many FIIs follow a “sell first, ask questions later” approach. So, if sentiment weakens due to a stalled tariff deal, or even if earnings are good but not as strong as those in the US, that becomes an excuse to trim positions.
The recent dollar rally is another reason — it puts pressure on emerging markets. All these smaller factors can build up into sustained selling. But I think we may be near the end of this phase.
Eventually, we’ll get some clarity on the macro front — whether around tariffs or interest rates. India’s economic growth remains very robust. Compared to much slower growth in the US or Europe, India continues to be attractive for foreign investors.
If the dollar weakens a bit, or if we see greater clarity around Fed rate cuts — even just one or two — that could encourage FIIs to return to India. Once earnings season concludes, the focus will shift back to the broader picture, and not just individual earnings misses. Many Indian companies have actually posted strong numbers, and that should not be overlooked.
