Global brokerage firm Jefferies has projected a significant uptick in foreign institutional investor (FII) inflows and a near-term strengthening of the Indian rupee following the announcement of a landmark India–US trade deal that reduces reciprocal tariffs on Indian exports to the United States to 18% from 50%. The deal was confirmed by both US President Donald Trump and Indian Prime Minister Narendra Modi, prompting a sharp improvement in investor sentiment and removing a major source of uncertainty that had weighed on Indian markets and capital flows.

Key Highlights

• Jefferies expects strong foreign investor inflows and rupee appreciation after the US reduced tariffs on Indian exports to 18%.
• The brokerage also identified key export-driven sectors and companies likely to benefit from improved trade competitiveness.

Jefferies noted that the agreement, while still pending full official details, is likely to end months of trade uncertainty, boost foreign investor confidence, and improve the outlook for the INR, which has been under pressure in recent months. The brokerage highlighted that one of the key market concerns — the weak rupee — could now be addressed, potentially paving the way for renewed FII interest in Indian equities after significant net outflows this year.

In addition to macro optimism, Jefferies identified several stocks and sectors that stand to benefit from the tariff cut and expanded access to the US market. Export-linked industries such as auto components, chemicals, solar manufacturing, textiles and labour-intensive segments are expected to see positive impacts, and Jefferies named companies including Sona BLW, Bharat Forge, Navin Fluorine, PI Industries, SRF, Waaree Energies, Premier Energies, Emmvee and Welspun Living as potential beneficiaries. Adani Group firms were also mentioned as likely to gain from improved trade conditions and sentiment.

Also Read: US and India Seal Trade Deal; Tariffs on Indian Goods Cut to 18%

Jefferies cautioned that if costs for imported US oil or gas rise, it could negatively affect oil marketing companies. Nonetheless, the overall outlook is upbeat, with the tariff reduction seen as an important catalyst for both equity markets and currency strength in the near term.