Modi-Xi Handshake, Tax Cuts Boost Case for Lagging Indian Stocks

Prime Minister Narendra Modi’s symbolic handshake with President Xi Jinping in China, combined with fresh tax cuts at home, is fueling optimism that Indian equities will finally narrow the gap with their emerging-market peers.

Improving trade links with the world’s second-biggest economy add to a string of positives for India, including the prospect of further central bank interest-rate cuts. Bulls are betting these catalysts will more than offset the impact of US President Donald Trump’s 50% reciprocal tariffs.

Modi met Xi in Tianjin on Aug. 31, where both pledged to act as partners rather than rivals. Discussions covered border ...