India: Trade deals and rupee undervaluation support outlook – HSBC

HSBC analysts note that Indian equities and the Rupee lagged the recent emerging market rally but may be at a turning point. Progress on a US‑India trade deal, following an EU agreement, has boosted stocks and sentiment. Fiscal discipline, infrastructure spending, elevated real yields and an undervalued Rupee are seen as reinforcing India’s positive investment outlook.

Trade progress, bonds and FX appeal

"India’s stocks missed out on the recent rally in emerging markets, and the rupee has also taken a hit."

"Both might now be at a turning point."

"News that a US-India trade deal is in the works – with US tariffs set to fall to 18% – has sparked a surge in India’s stocks."

"And the good news for international investors is that an undervalued rupee provides scope for positive FX returns."

"For fixed income assets, downward pressure on inflation should keep real yields elevated, enhancing the global appeal of Indian government bonds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)