India-US Trade Deal Boosts Equities: FPI Inflows Expected, Key Sectors to Benefit

• The India-US trade deal is anticipated to reverse FPI equity outflows, which have been significant since October 2024, as the US accounts for 41% of FPI AUC.
• Sectors with high FPI ownership like real estate, telecom, transportation, financial services, and healthcare are poised for gains.
• Sectors where FPIs are currently underweight, such as capital goods, IT services, and power utilities, could see increased allocation and valuation re-rating.
• The deal supports India's macro outlook by reducing tariff risks for nearly USD 50 billion in exports, particularly in labor-intensive sectors.
• It is estimated to boost India's nominal GDP growth by 50-80 basis points and could lead to near-term appreciation of the rupee.

Why It Matters: The India-US trade deal is set to significantly boost Indian equities, reverse FPI outflows, and strengthen the economy.