An interim trade deal has been agreed between India and America. This has opened the way for a comprehensive bilateral trade agreement (BTA) between the two countries. The trade deal was announced on February 3. But, its terms and conditions were awaited. Especially the Indian market was eagerly waiting for it. America has also withdrawn the additional 25 percent tariff imposed on India for purchasing oil from Russia. Due to this, American tariff on India has now reduced to only 18 percent. The question is how much impact will the interim trade deal have on the markets?
India has already signed deals with a dozen countries before America
Barclays has said, “We believe that the markets have already been affected by the bilateral trade agreement between the two countries. However, after the significant reduction in tariffs, the pressure on many asset classes will now reduce. This will provide significant support to asset prices.” The special thing is that before the announcement of interim trade deal with America, India had already made trade deals with about a dozen countries. The reduction in tariffs and now the interim trade deal is expected to have a positive impact on the sentiment of Indian markets.
With US tariff reduced to 18%, the pressure on some sectors will immediately reduce.
According to Nomura, the reduction in US tariffs to around 18 per cent will immediately reduce the pressure on labour-intensive export segments. With this, Indian exports will again be able to compete with the products of Southeast Asian countries. Products like toys and furniture, which were being exported from countries like Vietnam, will start being exported from India again. However, if we talk about immediate impact, it can have an immediate impact on the sentiment of the stock market.
If there is recovery in earnings growth then the stock market will soar
Experts say that the interim trade deal with America will improve the stock market sentiment. But, for the market rally to sustain, recovery in earnings growth of small and big companies is necessary. Nomura has said that India has been successful in its efforts to get concessions in tariffs as well as not to open up sensitive sectors like agriculture too much. In such a situation, the direct benefit of the interim trade deal and reduction in tariffs will be to those sectors which export more to America.
These sectors may see a rise when the market opens on February 9.
When the stock markets open on February 9, there may be a rise in the shares of companies in sectors like textiles, capital goods, gems and jewellery, leather sector, pharma. However, after US President Donald Trump’s trade deal announcement earlier this month, there was a big rise in the stock market. Companies in many sectors had gained wings. But, later the news of the launch of new AI tools by American company Anthropic spoiled the mood of the market. The huge decline in IT companies had an impact on the entire market.
2026 could be great for stock investors
Morgan Stanley has said in its new report on 6 February that if everything goes well then the year 2026 can be great for Indian markets. Morgan Stanley’s equity strategists Ridham Desai and Nayant Parekh have said that there are many reasons for the rise in Indian markets. RBI’s policy is going to promote growth. RBI has reduced the repo rate by 1.25 percent in the last one year. He is constantly trying to maintain adequate liquidity in the banking system. The government has maintained the focus on capital expenditure in the Union Budget 2026. There was a big cut in GST rates.
Also read: India-US Interim Trade Deal: This sector will benefit the most from this deal, investors can take advantage of the opportunity like this
Investors can make investment strategies like this to take advantage of the opportunity
Morgan Stanley believes that in case of a bullish trend, the Sensex can reach 1,07,000 points by December 2026. Under normal circumstances it can go up to 95,000 by December. In the bear case, it can go up to 76,000 by the end of this year. If the earnings of the companies increase in the coming months and the bullishness in the market continues, then those investors who have taken entry in the shares of good companies at low prices will benefit more. This means that investors can use the opportunity of decline to invest in the market. Investors will have to invest gradually instead of investing lump sum.
Disclaimer: The views expressed by the experts on Moneycontrol are their own views. These do not represent the views of the website or its management. Moneycontrol advises its users to seek the advice of certified experts before taking any investment decision.