To decode what this shift means for investors, Feroz Azeez, joint chief executive of Anand Rathi Wealth, speaks with mint to cut through the macro noise and explain how the development could shape portfolios.
Edited excerpts of the interview:
Markets have cheered the move, with the Nifty, Sensex and even the rupee rallying sharply. Were these moves largely sentiment-driven, or do you see this as a trend reversal?
This is not purely sentimental. When uncertainty lingers for months, its resolution has the power to trigger a sharp bounce. The tariff overhang began in April 2025, when the first 25% duty was announced, followed by another tranche shortly after.
Discussions dragged through September, October and November, and by the time the World Economic Forum in Davos rolled in, many had lost hope. It was only on 21 January 2026, when President Donald Trump remarked that India and US are going to have a good deal, that sentiment began to turn.
Since this uncertainty persisted for nearly six months, the market arguably deserved a 4-5%, even a 10% move. Ideally, given how short foreign institutional investors (FIIs) were in index futures, the rally could have been stronger. But the Securities and Exchange Board of India’s (Sebi) restrictions on long positions in options, introduced last June, limited momentum.
So, to reiterate, this move is not just about sentiment. Several economic variables improved meaningfully. While the modalities of the deal are still awaited and volatility may persist, the impact is structural rather than emotional.
The rupee has strengthened steadily and markets have held on to gains. With expectations of FII inflows returning, will Indian equities once again look attractive versus global peers?
Yes, they will look attractive. But there is a difference between becoming attractive and actually making money. Attractiveness comes first, price performance follows.
India looks attractive because GDP growth could get an incremental boost of 0.3-0.4%. The current account deficit could improve by about 1.2%. India already has nearly $700 billion in forex reserves, and a stable currency adds to confidence. Together, these factors support economic growth and, eventually, corporate profits.
Last year, FIIs sold about ₹1.6 trillion worth of equities, while domestic investors bought close to ₹7.8 trillion. When FIIs return, they will not get stocks at the same prices they sold them at. Historically, FIIs are less price-sensitive than domestic investors.
I expect flows to return gradually, possibly from March, building on the net positive flows already seen in February after a long gap. Over time, this should support markets, though the impact will differ across segments.
Retail investors have stayed committed through a long flat phase. When does their discipline start paying off?
Retail investors deserve a lot of credit. They have been extremely sensible. Markets have been largely flat since the September 2024 peak, yet inflows into systematic investment plans (SIPs) have risen from ₹19,000-20,000 crore a month to over ₹31,000 crore a month as of December 2025.
What many miss is that SIPs have already been paying off. While the headline Nifty is only marginally lower, SIP investors have benefited from volatility. When the Nifty fell to 21,000-21,800 levels, high net-worth individuals (HNIs) sold, but retail investors kept buying. Because of rupee-cost averaging, SIPs are have continued to deliver 9-10% returns over the past one to one-and-a-half years.
This is visible in investor statements, even if it doesn’t show up in index headlines.
If FIIs return, they would typically prefer large-cap quality stocks. Should investors tilt toward large caps, or do mid- and small-caps offer better long-term opportunities?
It’s true that FIIs own a higher share of large caps, around 22% of the Nifty 50. In mid-caps, their ownership is about 14% of total market cap, and in small-caps it’s even lower. But this skew exists largely because FIIs are index-heavy investors.
It’s not that they dislike mid- and small-caps. In fact, in my interactions with FIIs as a listed-company promoter, I’ve seen strong interest in smaller companies. Globally, many institutions track the MSCI India Small Cap Index, which has nearly 500 stocks, compared with about 250 in the NSE Small Cap index. Ironically, foreign investors track and invest in a broader universe of Indian small-caps than domestic investors do.
Large caps may benefit first from FII flows, but mid- and small-caps continue to offer meaningful long-term opportunities.
How should the US-India trade deal shape individual investing decisions over the short term and over three to five years?
With markets in check for a while, retail investors got time to earn and invest. Retail investors rarely sit on large lump sums, time is their biggest ally.
For those with lump-sum money, don’t be overly paranoid. Equity markets correct 10-15% almost every year, and this has happened consistently for the past 25 years. If markets have delivered muted returns for the past year and a half, the odds of future returns actually improve.
Don’t wait endlessly for the ‘perfect’ entry point. Learn to live with volatility. Surf the waves instead of swimming against the tide.
Which sectors are likely to benefit the most from lower tariffs and improved access to foreign markets?
Sectors that underperformed earlier stand to benefit the most. Pharmaceuticals should do better.
The seafood sector, though not heavily represented among listed companies, will benefit. Gems and jewelery should also gain, and the energy sector is another clear beneficiary. These four sectors are most directly impacted by the trade deal.
Moving away from the trade deal, what are your thoughts on the recent STT hike announced in the Budget?
The securities transaction tax (STT) hike has a negligible impact on speculation, which is how it was positioned. For a retail trader deploying ₹5 lakh, the additional cost may be around ₹Rs 175 a month, hardly enough to curb speculative activity.
The real issue is that higher transaction costs make markets less efficient. Arbitrage funds and institutional strategies take a hit, which is collateral damage. That’s why markets reacted negatively: the unintended consequences outweighed the stated objective.
The direct monetary impact is minimal. But the message between the lines matters. India is trying to create an investor-friendly market rather than a trader-friendly one. Unlike the US, where leverage can go up to 70 times, India keeps leverage tightly controlled.
This signals that policymakers want to encourage long-term investing and the financialization of savings. If we want equity participation to rise from 6-7% of household savings to 30-40%, we need an ecosystem that rewards investors, not excessive trading. That’s the bigger positive takeaway.
