Brokerage sees removal of 15-month overhang on equities as tariff cuts and improved trade outlook boost chances of foreign inflows
Indian equities could see a meaningful turnaround in foreign investor sentiment following the India–US trade deal, with foreign portfolio investor (FPI) outflows likely to reverse after months of pressure, according to a report by Antique Stock Broking.
The brokerage said the trade agreement removes a major overhang that has weighed on Indian markets for the past 15 months, improving visibility for equities at a time when valuations have normalised relative to global peers.
“This development is significantly positive for Indian equities as FPI equity outflows of USD 34 billion since October 2024—the highest among emerging markets—may now reverse,” the report noted. The US accounts for nearly 41 per cent of total FPI assets under custody (AUC) in India, making improved bilateral trade relations critical for capital flows. The FPI witnessed an outflow of around $18 billion in 2025, the highest ever, driven by geopolitical uncertainties.
According to Antique, India’s valuation premium versus other emerging markets (EMs) and developed markets (DMs) has eased to near long-term averages, further strengthening the case for renewed foreign inflows.
The optimism follows an announcement by U.S. President Donald Trump, who said on his social media platform Truth Speak that reciprocal tariffs on Indian goods have been sharply reduced from 50 per cent to 18 per cent, slightly lower than tariffs faced by other Asian peers. In return, India has committed to reducing tariffs and non-tariff barriers to zero, according to initial indications.
While detailed terms of the agreement are yet to be formally released, Antique believes the improved trade outlook with the United States could act as a strong catalyst for equities in the near term.
The brokerage highlighted select sectors such as consumer discretionary as key overweight areas, supported by easing external risks and resilient domestic growth prospects.
Market participants will now closely watch the formal announcement of the deal and its implementation timeline, as clarity on sector-specific benefits could further influence equity flows and broader market direction.
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