Daily Voice: Supreme Court ruling lifts sentiment but won’t trigger a sustained rally, says Narnolia’s Shailendra Kumar

Shailendra Kumar is the Chief Investment Officer at Narnolia Financial Services

• Supreme Court’s ruling against Trump’s tariffs not a strong enough catalyst to drive sustained rally
• Ruling adds fresh complexity for countries that have either already signed a trade deal with the US or are in the final stages of doing so
• Indian equities underperform MSCI Emerging Markets Index over past 24 months

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The markets view the Supreme Court’s ruling against Trump’s tariffs as a marginally positive development, but not a strong enough catalyst to drive any meaningful or sustained rally from current levels, said Shailendra Kumar, Chief Investment Officer at Narnolia Financial Services, in an interview with Moneycontrol.

According to him, the ruling does not put uncertainty to rest; rather, it is likely to create a new layer of uncertainty in the near term.

“The ruling has added fresh complexity for countries that have either already signed a trade deal with the US or are in the final stages of doing so — there are now simply more moving parts to navigate,” Shailendra Kumar said.

Do you think the Supreme Court’s ruling against Trump-era tariffs is a reason to cheer the markets, or is it insufficient to trigger a sustained follow-through rally, especially considering Trump’s response after the court decision?

The ruling landed during active trading hours across North and South American markets, including Canada, Mexico, and Brazil. While the initial reaction was broadly positive, it fell well short of euphoric. Currency markets told a similar story. The markets view this as a positive development at the margin, but not a strong enough catalyst to drive any meaningful or sustained rally from here.

Do you strongly believe that Trump will continue to take all possible measures to defend his tariff decisions?

The ruling reinforces the idea that democracy and its institutions are ultimately self-correcting when pushed to extremes. It is a significant setback for the Trump administration. But judging by the administration's swift and defiant response, it would be premature to assume that this chapter is closed.

Trump is already hinting at potential Section 301 investigations on countries for long-term tariffs.

What could be the impact of the additional 15 percent global tariff announced by Trump following his reaction to the Supreme Court’s ruling?

Though Trump initially announced a 10% global tariff, he quickly pushed it to 15%. The measure is valid for 150 days and technically requires congressional approval to extend, a hurdle that looks difficult to clear given the political landscape.

However, the administration retains a backdoor option: it could simply allow the tariffs to lapse, declare a fresh balance-of-payments emergency, and restart the 150-day clock all over again.

Do you believe the trade war is far from over and could take more unpredictable or aggressive turns from here?

This ruling does not put uncertainty to rest. Rather, it will create a new layer of it in the near term. US importers, knowing that the current 15% duty has a finite shelf life, may rationally choose to pause or defer purchases, betting that tariffs will be lower once the 150 days expire. That wait-and-watch approach could actually compress trade volumes in the short term, making the economic disruption as damaging as the tariffs themselves.

Do you think India’s underperformance relative to global markets is likely to reverse soon?

On a rolling USD total-return basis, Indian equities have underperformed the MSCI Emerging Markets Index over the past 24 months. What makes this particularly notable is that the current stretch ranks among the longest and deepest episodes of Indian equity underperformance relative to the MSCI Emerging Markets Index.

However, we believe this phase of sharp and prolonged underperformance is approaching its end, and a meaningful reversal may not be far away.

Are you more bullish on capital goods exporters compared to companies focused primarily on the domestic market?

We continue to maintain a more constructive and bullish stance on companies with a predominantly domestic market focus. At the same time, we have begun selectively turning our attention to high-quality capital goods exporters, where meaningful valuation corrections have brought prices down to more reasonable and attractive levels.

What is your take on India-US trade deal signing by March, especially after Court ruling?

The ruling has added fresh complexity for countries that have either already signed a trade deal with the US or are in the final stages of doing so — there are now simply more moving parts to navigate.

India, to its credit, has used this period of global trade uncertainty constructively, strengthening its strategic positioning through important defense and trade partnerships, most notably with Europe. However, there is no time for complacency. India must remain continuously vigilant, carefully calibrating its responses to protect both its economic interests and the integrity of its broader strategic choices.