Daily Voice: 'Continuity, discipline' and why FIIs are still on the fence

Ross Maxwell is the Global Strategy Operations Lead at VT Markets

• Markets to look for continued focus on capital expenditure, infrastructure development, support for manufacturing
• Budget needs to maintain credible path toward fiscal consolidation
• Maintaining fiscal discipline with focus on long-term growth drivers to be essential for preserving investor confidence

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"My key expectations from the upcoming Budget would be for continuity and discipline," said Ross Maxwell, the Global Strategy Operations Lead at VT Markets, in an interview to Moneycontrol.

According to him, markets will look for a continued focus on capital expenditure, infrastructure development, and support for manufacturing, while maintaining a credible path toward fiscal consolidation. Maintaining fiscal discipline while keeping the focus on long-term growth drivers will be essential to preserving investor confidence.

After the recent Federal Reserve policy meeting, he believes the FED would most likely maintain its pause at least through the June meeting. "There is no pressing need for rate cuts right now, despite political pressure," he said.

What are the critical factors India must address to attract Foreign Institutional Investors (FIIs) back into equities?

To bring FIIs back into Indian equities, policy consistency and macro stability are essential. Investors will be looking for strong corporate earnings visibility, predictable taxation, and continued reform momentum. It will also be important for reforms that enhance ease of doing business, stronger governance, and the ability to sustain high-quality growth.

In a competitive global environment, India’s ability to offer stability, scale, and long-term growth remains its strongest advantage.

What are your key expectations from India’s Union Budget scheduled for February 1?

My key expectations from the upcoming Budget would be for continuity and discipline. Markets will look for a continued focus on capital expenditure, infrastructure development, and support for manufacturing, while maintaining a credible path toward fiscal consolidation. Maintaining fiscal discipline while keeping the focus on long-term growth drivers will be essential to preserving investor confidence. A credible path for fiscal consolidation, alongside targeted social spending, would reinforce macro stability and investor confidence.

What is your assessment of the US Federal Reserve’s recent decision and the Chair’s commentary?

The FED’s decision to hold rates reflects a balanced and cautious approach to interest rates. Chair Powell’s commentary made it clear that while inflation has moderated meaningfully, the FED is not yet fully comfortable that the danger is completely removed.

The emphasis again that any future decisions will be driven by data suggests policymakers want to avoid the risk of easing too early and reigniting inflationary pressures. Overall, the commentary showed confidence about progress so far, but mindful of the uncertainties that remain.

Do you believe the US Federal Reserve will maintain its pause at least until the June meeting?

Yes, I do believe the FED would most likely maintain its pause at least through the June meeting. Economic growth has held up better-than-expected, financial conditions have eased, and inflation in services remains sticky. There is no pressing need for rate cuts right now, despite political pressure. Waiting allows the FED to assess whether recent disinflation trends are sustainable and whether tighter policy is continuing to work throughout the economy.

This could change if there is a clear and rapid deterioration in economic data. A sharp slowdown in growth, a meaningful weakening in the labour market, or signs of stress in credit markets which would push the FED to cut earlier.

Are you confident that the US economy will remain resilient, with no major concerns around the labour market or inflation?

The US economy has shown remarkable resilience, especially in consumer spending and headline labour market indicators. I would be cautious about being overly confident though. There are signs of gradual cooling, including slower hiring and declining job openings, which Chair Powell referenced in his commentary and said this could be as a result of AI in the near-term.

Inflation risks also remain, particularly from services and potential supply-side disruptions. Whilst the signs are relatively good for now, risks on both growth and inflation still need to be monitored closely.

Do you rule out the possibility of a major correction in US equity markets?

I would not completely rule out the possibility of a significant correction. Strong optimism around earnings growth and expectations of eventual rate cuts has created overstretched valuations in certain sectors. This leaves the markets susceptible to negative surprises, whether that be from missed earnings, delayed monetary easing, or external shocks.

So, whilst the market does not show any immediate signs of structural concern, corrections are a normal part of market cycles.

Do you think geopolitical risks will remain in the background and are unlikely to significantly disrupt financial markets?

Geopolitical risks have dominated headlines in recent months and years, which has created some short -term volatility, but the markets have overall largely shaken off any threats. Markets tend to discount geopolitical developments unless they materially affect energy prices, trade flows, or financial stability.

Any escalation that disrupts supply chains or leads to sharp commodity price movements could quickly change market sentiment, so traders and investors need to look beyond the headlines and determine the material impact on the markets.

Do you still anticipate tensions related to Greenland, even though the situation appears to have calmed down in the US and Europe?

The tensions around Greenland have subsided for now, but the underlying issues remain and are likely to resurface periodically. Strategic interest in the Arctic, access to key resources, and geopolitical positioning remain relevant over the medium to long term.

President Trump has been very vocal about it being a matter of national and international security, and I’m sure there will be more posturing at times, however, strategically from a US, EU and NATO perspective it is in no one’s interest to escalate tensions.

What is your view on the India–European Union Free Trade Agreement? Could it be a game changer for India?

The India–EU Free Trade Agreement has the potential to be structurally very positive for India. If implemented effectively, it could improve market access for Indian exporters, strengthen manufacturing competitiveness, and support integration into global value chains.

Beyond normal trade flows, such an agreement would also send a strong signal about policy stability and India’s commitment to deeper economic engagement with major global partners. This could be particularly valuable in attracting global capital.