India-US Trade Deal & Japan's FDI Shift

Indian equity benchmark indices, BSE SENSEX and NIFTY 50, opened positively on Monday, fueled by foreign fund inflows, a rally in Asian markets, and a new interim trade agreement between India and the United States. The agreement saw the United States reduce tariffs on Indian goods from 50 per cent to 18 per cent, with India committing to purchase USD 500 billion in US goods over five years, focusing on energy, aircraft, and defence technology. This deal strategically integrates India into the US-led 'Pax Silica' initiative for critical minerals and AI supply chains, positioning India as a counterweight to China in the Indo-Pacific. Additionally, Japan's Nikkei 225 reached record highs following the decisive victory of the Japan===Liberal Democratic Party (Japan) led by Sanae Takaichi, with expectations of Japanese capital pivoting from China to India's infrastructure and technology sectors. Foreign institutional investors bought equities worth Rs 1,950.77 crore on Friday, indicating a positive shift in their investment behavior. While banking stocks are expected to gain strength from improving credit growth, the IT sector may continue to be impacted by the 'Anthropic shock'.