Global brokerage firm Jefferies has issued an “overweight” rating on India, citing the country’s resilience and potential to outperform other emerging markets (EMs) despite growing global economic uncertainties. In its latest research note, Jefferies said while absolute index performance remains difficult to forecast, India is likely to emerge as a relative outperformer compared to its EM peers.
A key factor behind this optimism is India’s limited trade dependence on the US and China, the two largest economies currently navigating trade tensions and economic slowdowns. India’s exports to the US account for just 2.3% of its GDP, even though the US remains India’s largest export destination. This modest trade exposure provides a cushion against any aggressive US trade policies.
Jefferies noted that while the US has imposed tariffs of 26% on Indian goods, these levies are still less severe than those imposed on other Asian economies such as China, Indonesia, and Taiwan. Moreover, the Indian government is reportedly optimistic about securing more favourable trade terms through ongoing bilateral negotiations with Washington.
Another positive factor working in India’s favour is the sharp decline in Brent crude prices, which have fallen nearly 20% year-to-date to around $60 per barrel. As a major net oil importer, India stands to gain significantly from the price drop. According to Jefferies, the fall in oil prices supports India’s current account balance, helps offset any loss from the US trade surplus, and offers a fiscal boost through increased revenues from fuel duties.
The brokerage has expressed a bullish outlook on sectors such as banking, power, telecom, automobiles, and real estate, which are expected to benefit from improving domestic macroeconomic conditions and investor confidence.
Investor sentiment in Indian equities has also remained strong. In March 2025, both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) turned net buyers. According to a report by JM Financial Securities, FIIs invested $975 million, while DIIs made more significant net purchases of $4.3 billion** during the month.
A significant shift in FII behaviour was observed in March. While FIIs were net sellers until March 19, they turned aggressive buyers in the second half of the month, investing $3.6 billion into Indian equity markets, marking a remarkable turnaround in sentiment.
Meanwhile, global trade dynamics continue to shift. US President Donald Trump announced on Thursday that trading partners who fail to reach a new trade agreement with the US by July 9, when the current 90-day negotiation pause ends, will face reciprocal tariffs on their exports to the US. This announcement adds further uncertainty to the global trade landscape, potentially impacting countries with heavier trade exposure.
(With IANS inputs)
