With Washington and New Delhi supposedly edging closer to a long-awaited bilateral trade agreement, optimism is rising across markets, particularly among investors eyeing India-focused exchange-traded funds (ETFs). This optimism is largely based on a report published by the Indian media outlet, Mint, according to which sources have confirmed that the United States is preparing to cut tariffs on Indian imports to between 15% and 16% from the current 50%, following India’s assurance to curtail its purchase of ...

Core Insights - The iShares MSCI Brazil ETF experienced a significant inflow of $285 million in the week leading up to a call between President Trump and Brazilian President Lula da Silva, discussing potential tariff reductions [2] - The ETF has shown a year-to-date increase of over 37%, indicating strong performance despite previous tariff announcements [2] - In contrast, the iShares MSCI India ETF has only returned 0.23% year to date, highlighting India's underperformance in the ETF category amid similar tariff challenges [3] Brazil's Performance - Brazil's exports to countries other than the US have increased, mitigating the impact of the 50% tariffs imposed on Brazilian goods [2] - The inflow into the Brazil ETF marks the first net inflows since the tariffs were announced in July [2] India's Situation - The Nifty-50 index in India has seen a marginal increase of 2% since the implementation of the tariffs, driven by domestic sectors like financials and consumer discretionary [3] - Key export-oriented sectors such as IT and pharmaceuticals are not affected by the tariffs, contributing to the muted market reaction [3] China's Performance - The KraneShares CSI China Internet ETF and the iShares MSCI China ETF have returned nearly 46% and 43% respectively, indicating strong performance despite some institutional divestment from China [3] Caution in Emerging Markets - Investors in single-country funds, particularly in emerging markets, are advised to exercise caution and monitor their investments more frequently compared to the US market [4]

Core Points - The article discusses the potential for a temporary trade agreement between the United States and India, which may lower the planned tariff rates on India to below 20% [1] - There are indications that India is seeking a more favorable trade agreement compared to the recent U.S.-Vietnam agreement, which has faced complications [6] - Following recent trade negotiations, India has indicated plans to impose retaliatory tariffs on U.S. products in response to U.S. tariffs on Indian automotive imports [7] Group 1 - The U.S. is reportedly working towards a temporary trade agreement with India, which could ease tensions and allow for further negotiations [1] - The Indian government is looking for a trade deal that is more advantageous than the one recently proposed to Vietnam, which has been criticized for its unfavorable terms [6] - After a recent round of negotiations, India has communicated its intention to the WTO regarding retaliatory tariffs on certain U.S. products [7] Group 2 - India is expected to send a delegation to the U.S. for further trade discussions, focusing on resolving disputes over tariffs on automotive parts, steel, and agricultural products [8] - The U.S. has requested India to open its agricultural market, particularly for genetically modified crops, but India has rejected this due to concerns over food security [9] - Key issues remain unresolved, including non-tariff barriers in agriculture and regulatory processes in the pharmaceutical sector [9]