Fed Rate Cut, Trade Deal: Indian Equities Outlook Amidst Uncertainty

• US Federal Reserve cut interest rates by 25bps, totaling 75bps in 2025 and 175bps since September 2024, with FOMC dissent creating uncertainty for future cuts.
• Markets are pricing in more 2026 rate cuts than the Fed's projections, despite elevated US inflation and strong GDP growth.
• Indian equities are buoyed by the anticipated India-US trade deal, expected by March 2026, and projected improved corporate earnings growth for FY2027.
• Sobering valuations and expected earnings growth are poised to attract FII flows to India.
• Historically, US rate cuts allow India's central bank to lower rates, potentially boosting India's consumption.

Why It Matters: US Fed actions and India-US trade deal are key for Indian equity investors.