India: Trade deals and rupee undervaluation support outlook – HSBC

💡 DMK Insight

Indian equities and the Rupee could be on the verge of a breakout, and here’s why that matters: Despite lagging behind the broader emerging market rally, recent developments around a US-India trade deal are shifting sentiment. This could catalyze a stronger performance in Indian stocks, particularly if the Nifty 50 index breaks above key resistance levels. Traders should keep an eye on the 18,000 mark for the Nifty, as a sustained move above this level could signal a bullish trend. Additionally, the Rupee’s performance against the Dollar could see improvement, especially if foreign inflows increase as a result of this trade deal. However, it’s worth noting that while optimism is building, there are risks. If the trade deal faces delays or complications, we could see a quick reversal in sentiment. The broader context of rising inflation and potential interest rate hikes in the US could also impact foreign investment flows into India. So, watch for any news on the trade negotiations and monitor the Nifty’s performance closely over the next few weeks to gauge potential entry points.