Sunil Singhania, founder, Abakkus Asset Manager
Last year, India and other South-East Asian countries were hoping to benefit from the US-China trade war. When COVID-19 struck, many countries formed alliances as well since China had become the villain of the world. In a first, even India and Australia joined hands for military support. This is crucial in light of the border issue between the two Asian behemoths. On the other hand, reports suggest that a few railway contracts given to Chinese companies have been cancelled. Eventually, Indian companies will benefit from these decisions as they would otherwise continue facing tough competition. Companies such as BHEL have gained because most of the power equipment so far would be imported from China. Similarly, the sentiment towards metal and building material companies has improved because India imports a lot of materials such as stainless steel, tiles and sanitary-ware. In effect, the market is looking at positive fallout of the growing anti-China sentiment.
Ravi Gopalakrishnan, head-equities, Principal Asset Management
Thus far the India-China standoff has not blown into a major confrontation, given the high stakes involved for both countries. However, given that the history of dispute goes a long way, it is unlikely to see complete resolution. Since India is a major importer (approximately $70 billion) of Chinese goods, the government is considering imposing duties on select items that are non-critical in nature. Meanwhile, even before COVID-19 and the current border dispute, India was in the process of attracting foreign capital into the country through its ‘Make in India’ initiative. While the isolated face-off is a one-off event, it is unlikely to disturb FDI inflow. But it is still too early to write off the seriousness of what happened at the border. In the near term, investors are likely to remain a bit cautious and watch the situation as it unfolds.