India's Growth Story to Drive Foreign Flows: Dalal

Foreign flows into Indian equities will follow the country's growth story rather than the AI trade reversal, Sameer Dalal said. The comment shifts attention from the selloff in IT stocks to the macroeconomic support from lower crude oil prices.

Brent crude has slipped below $77 a barrel. The drop accelerated after Trump ordered a Department of Justice probe into pump price gouging. For India, the world's third-largest oil importer, each $10 fall in crude reduces the annual import bill by roughly $15 billion. That improves the current account deficit, cools inflation, and widens fiscal space – a combination that historically draws foreign portfolio investors back into the market.

The AI trade reversal has hit IT exporters hard. Infosys carries an Alpha Score of 57 (Moderate) while Wipro scores 46 (Mixed). Dalal's argument frames the IT weakness as sector-specific rotation rather than a signal that foreign investors are souring on India. Domestic lenders tell a different story. HDFC Bank, with an Alpha Score of 43, is more closely tied to the consumption and credit cycle that lower oil supports.

The setup holds if Brent stays below $77 and foreign portfolio inflows pick up in the coming weeks. A reversal that pushes crude above $80 or a global growth scare that overrides the oil benefit would weaken the case.

The DOJ probe is in its early stages. Brent at $77 gives India an import cost advantage that the IT sector's pain cannot offset. Why Brent Below $77 Shifts India's Equity Calculus explores the sector-level implications further.