Trade Winds: U.S.-India Deal Revitalizes Markets Amid AI Challenges

The U.S.-India trade deal has provided a boost to the Indian rupee and stock market, soothing investor sentiment. Despite this positive development, long-term growth remains hindered without a rebound in earnings and fundamental improvements. AI's absence in India poses challenges for domestic equities against global competition.

The U.S.-India trade deal has breathed life into the beleaguered Indian rupee and halted a period of continuous foreign divestment from stocks. However, investors stress the necessity for revived earnings growth and stronger fundamentals for sustained market interest.

Although the long-awaited agreement spurred a significant rally in both the stock market and the rupee, reflecting improved diplomatic and trade relations, concerns about India's economic standing remain. The lack of AI-driven companies in the country's market landscape places Indian equities at a disadvantage compared to global peers.

While some investors remain optimistic about India's future prospects, broader enthusiasm may take time to manifest. Growth indicators such as profit increases for Indian companies remain sluggish, and the currency continues to battle depreciation pressures. The recalibration of tariffs in the trade deal offers hope but not instant revenue boosts.

(With inputs from agencies.)