Daily Voice | Post-US BTA, India clears 70% export deals; FIIs urged to reassess underweight: Trideep Bhattacharya

Trideep Bhattacharya is the President & CIO-Equities at Edelweiss Asset Management

• India-US trade deal removes a major sentiment overhang
• FIIs likely to reassess their underweight positioning towards India
• India at the early stages of an earnings upgrade cycle

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After the India-US trade deal, Trideep Bhattacharya, the President & CIO-Equities at Edelweiss Asset Management, believes the INR has likely found its near-term bottom. This is supported by a fiscally responsible Union Budget and improving macro stability, he said in an interview with Moneycontrol.

Additionally, with nearly 70% of India’s exports now covered under favourable trade agreements, this should support medium-term economic strength and provide currency stability over time, he believes.

According to him, with most macro overhangs now largely behind us, investor focus is likely to shift toward earnings progression across sectors in India. "Sustained earnings delivery will be key to market re-rating," he said.

After considerable back-and-forth negotiations, how significant is the India–US tariff and trade deal for both markets?

The deal is significant primarily because it removes a major sentiment overhang that had weighed on investor confidence.

Although the direct economic impact of US tariffs was relatively small at around 0.3% of GDP, the psychological and positioning impact on how global markets perceived India was materially negative.

Removing this uncertainty is therefore meaningful for market confidence.

With Indian equities at the forefront of global attention following the announcement, how do you view their current positioning relative to other major markets?

India currently remains significantly underweight in regional and global portfolios, despite its structural growth story. Over the past year, India has underperformed broader emerging markets by roughly 40%.

Additionally, the weakness in the INR was partly linked to trade conflicts between India and the US during 2025, further weighing on positioning.

How do you expect foreign institutional investors’ (FIIs) sentiment and flows to evolve in response to this deal?

FIIs are likely to reassess their underweight positioning towards India going forward. With the US deal combined with the EU agreement, over 70% of India’s exports are now covered under trade deals.

Additionally, India’s revised tariff level of around 18% is among the lowest compared to global trade competitors, improving attractiveness.

Does the trade agreement change your earnings growth outlook for Indian companies in FY27?

We have maintained the view that India is at the early stages of an earnings upgrade cycle.

The Indo-US and Indo-EU trade deals strengthen this thesis by improving external demand visibility, supply chain participation, and cost competitiveness, thereby reinforcing our positive direction on earnings growth expectations into FY27 and beyond.

What impact do you foresee on the Indian rupee and overall currency markets in the near term?

We believe the INR has likely found its near-term bottom. This is supported by a fiscally responsible Union Budget and improving macro stability.

Additionally, with nearly 70% of India’s exports now covered under favourable trade agreements, this should support medium-term economic strength and provide currency stability over time.

How are Indian bond yields likely to react to the news of the tariff and trade deal?

In the near term, bond yields could react negatively as markets price in potential growth optimism and capital flow adjustments.

However, over time, yields are likely to stabilise and adjust based on the actual implementation details, trade volumes, and the broader macro transmission of these trade agreements into growth and inflation dynamics.

Are there any other macroeconomic indicators or market segments investors should watch following this announcement?

With most macro overhangs now largely behind us, investor focus is likely to shift toward earnings progression across sectors in India.

Sustained earnings delivery will be key to market re-rating. This supports our broader view that Indian equities are positioned to potentially outperform global equities during 2026 as earnings upgrades materialise.