Trade Deal Hopes and Economic Resilience Drive Inflows
Foreign portfolio investors (FPIs) have poured approximately $4.11 billion into Indian equities over the past nine trading sessions, marking their longest buying spree since July 2023. Optimism around a potential U.S.–India trade agreement, combined with India’s status as the fastest-growing large economy in FY 2026, underpinned the rally in the Nifty 50, which climbed 6.6% over the period.
Key Drivers Behind the Surge
U.S.–India deal expectations: Treasury Secretary Scott Bessent signaled that India could be among the first partners to finalize tariff reductions.
Relative economic strength: Unlike the U.S. and China—more exposed to a global trade war—India’s robust growth outlook and stable policy framework attracted fresh capital.
Valuation appeal: With Nifty trading well below its September 2024 peak, cheap corporate multiples enticed buyers.
Valuation Edge: Cheap Multiples Highlighted
Many large-cap names in consumer goods, financials, and energy sectors look particularly attractive on a relative basis. According to Financial Modeling Prep’s Sector P/E Ratio API, Indian industrials and consumer discretionary stocks are trading near 15× forward P/E, materially below their 10-year average of 18×, underscoring the valuation gap that FPIs are exploiting.
Geopolitical Overhangs Fade, Earnings Shine
Despite recent tensions following a militant attack in Kashmir, equity flows shrugged off concerns as investors focused on strong Q4 results from heavyweight Reliance Industries (NSE: RELI) and other blue-chips. Analysts at Equinomics Research note that India’s corporate earnings resilience, paired with improving trade relations, creates a favorable setup for continued inflows.
What to Watch Next
Trade negotiations: Any formal agreement—or setback—on U.S.–India tariffs will likely trigger renewed volatility.
Earnings updates: Upcoming Q1 reports from major banks and exporters will test whether profit growth can sustain the rally.
Global risk sentiment: Shifts in U.S.–China relations and broader market trends will influence India’s premium among emerging markets.
This measured combination of trade optimism, attractive valuations, and earnings momentum underpins the FPI resurgence in Indian equities.
