What do the recently concluded Trump – Putin talks imply for Indian equity markets?

A three-hour talk between US President Donald Trump and Russian President, Vladimir Putin, took place in Anchorage in Alaska on Friday, 15^th August. According to reports, Mr. Putin has asked President Trump that Ukraine should withdraw its forces from Donetsk and Luhansk and give these regions to Russia, if a ceasefire is to be reached. Ukraine President Volodymyr Zelensky will meet President Trump on Monday to discuss this proposal.

President Trump goes soft on Russia

After the talks, President Trump appeared to be soft on Russia. He also indicated that he may forego punitive actions against countries that are buying Russian oil. This has raised some hopes that India may escape the additional 25% tariff on its goods for buying Russian oil. This additional 25% tariff will come into force from August 27^th.  India has continued to buy Russian oil in spite of the announcement of the additional punitive tariff.  India is purchasing on average of 2 million barrels per day of Russian oil in August. This is higher than the 1.6 million barrels per day that it purchased in the month of July.

The only hope that Indian equity markets may get from the Putin-Trump talks is that the probability of a ceasefire between Russia and Ukraine may have increased somewhat. Things will become clearer only after the meeting between President Trump and President Zelensky on Monday.

US trade team cancels its 25^th August visit to India

Meanwhile, Indian equity markets have got an additional shock. The US trade team has cancelled its upcoming visit to India on 25^th August. This means that the prospect of India and US reaching a trade deal has been pushed back for the time being.

A ceasefire between Ukraine and Russia may come as a relief for equity markets around the world, in these highly uncertain times. It will reduce geopolitical risk considerably. This in turn will reduce the required rate of return of investors, especially foreign investors. This in turn may come as a breather for equity markets that are struggling currently, such as the Indian ones.

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Source: Reports