Tantallon India Fund Report, January 2025

The Tantallon India Fund closed down -6.40% in January with the market marking a four-month losing streak, the longest in over two decades, on the back of persistent foreign investor outflows (US$25bn+ over the past 4 months, $9 billion+ in January alone) triggered by a strengthening US$, a steeping US$ yield curve, and a sell-down in non-US risk assets, coincident with a re-set in expectations on inherently disruptive Trump policy priorities on geo-politics, tariffs, and immigration. Despite our portfolio holdings continuing to execute well and deliver on earnings and cash flows, our small and mid-cap tilt has been an additional drag on performance. As we wind towards the close of the current earnings season, we do expect that market sentiment and the focus on the strength of the underlying fundamentals will be restored on the back of a strong budget (encouraging domestic consumption and ongoing reforms without sacrificing fiscal discipline), the RBI’s recent decision to cut interest rates and inject liquidity into the banking system, and expectations that the BJP’s resounding victory in the recent Delhi state elections will encourage an
acceleration in infrastructure and industrial capex.