Investors say profits growth must resume and fundamentals must improve for sustained buying, but the US-India trade deal has cleared the air around the much-hated Indian rupee and is likely enough to stop the unrelenting foreign dumping of stocks.
The long-awaited agreement, which signalled improved diplomatic and trade relations with the US, sent the stock market soaring and the rupee to its strongest gain in seven years. However, that was only one of the factors weighing on the currency and stock markets, which have seen foreign allocations decline to a two-decade low and underperformed their regional and global peers by a significant margin since the start of last year.
Despite being close to record highs, Indian stocks are susceptible to artificial intelligence disruptions and have lagged behind the AI rush due to the lack of companies in the industry. Even if it enables businesses to begin planning capital expenditures, the specifics of the trade agreement remain limited.
Michael Bourke, head of global developing markets for equities at M&G Investments, stated, “I’m not sure that tariffs have an immediate impact, but they definitely feed into sentiment—that’s probably the best way to think of it.”Do you expect a sudden increase in earnings just because tariffs have decreased? He stated, “I’m not yet certain that’s a line I would draw.”
According to Naomi Waistell, fund manager in Carmignac’s emerging equities division, which oversees $48.5 billion in assets, the purchase is significant for markets, but mainly for sentiment and value. Even though they invested $580 million on Tuesday, foreign investors have pulled about $23 billion out of Indian stocks since the beginning of 2025.
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