India-US trade deal: After a gruelling few months, the Indian stock market has found its mojo back. And with the possibility of an India-US trade deal looming, analysts believe the “sky is the limit” for the Indian stock market.
A report in Mint today stated that New Delhi and Washington are closing in on a long-pending trade deal that could result in tariffs on India being lowered to 15-16% from a massive 50%.
The deal, as per the report, is set to be announced at the ASEAN Summit later this month between US President Donald Trump and Indian Prime Minister Narendra Modi.
What’s on the negotiating table?
The US now appears ready for a deal with India, especially driven by China’s hardening stance, as per some experts cited in the report. China’s tighter control over rare-earth exports and the deepening US–China trade war are forcing Washington to build alternative supply chains.
Moreover, in order to facilitate the bilateral trade agreement, India is expected to scale back its imports of Russian oil on the energy side, and is considering allowing ethanol imports, with Washington expected to extend concessions on energy trade in return.
Currently, Russia accounts for about 34% of India’s crude imports. Whereas, about 10% (by value) of the country’s current oil and gas needs are imported from the US.
India is also considering increasing the quota for importing non-GM maize from the US, in response to rising domestic demand from poultry feed, dairy inputs, and ethanol industries.
Gift Nifty signals a gap-up start
Against the backdrop of an India-US trade deal, the Gift Nifty traded on a firm note today. While the Indian stock market remains closed today (October 22) for Diwali Balipratipada, a gap-up start for tomorrow cannot be ruled out.
As of 3.40 pm (IST), Gift Nifty futures traded nearly 377 points or 1.45% higher at 26,300, signalling a bullish start for the Indian stock market in trade on October 23.
A gap-up start tomorrow could push the Nifty 50 index to a fresh high as it trades just 1.5% shy of the previous peak of 26,277.
Likely impact of trade deal on Indian stock market
Favourable resolution to the India-US trade deal could remove an overhang for the market, believe analysts.
Harshal Dasani, Business Head, INVAsset PMS, said the markets have been consolidating within a tight range for over a year, despite India’s strong macros — from the in-principle India–UK trade deal and a 50-bps rate cut in June, to GST and income-tax reductions, and a demand-heavy festive and wedding season ahead. “The only overhang has been the India–US trade deal. If Washington moves to lower tariffs to 15–16%, it could be the missing trigger,” Dasani opined.
Market veteran Sunil Subramaniam and Strategic Advisor at BayFort Capital, said If these rumours are true, then it could trigger the return of the FIIs. “Then the sky is the limit.”
FIIs have stayed on the sidelines of the Indian domestic market this year, turning net sellers of stocks worth ₹147,158 crore year-to-date. After three months of selloff, the trend is showing a reversal this month, as FIIs have been net buyers of Indian equities, amounting to ₹7,362 crore.
Kranthi Bathini of Wealthmills Securities opined that if the tariffs come back to 15–16%, that would be favourable for the nation and exporters as well.
However, he said that one should not jump the gun on the source-based news and wait for clarity. “Earlier, too, the narrative kept changing. But it’s a positive move. If it materialises, it would be great for the market and for investors,” he added.
Dasani sees a fresh bull run on the back of any positive development on the trade front as the global risk appetite remains firm and domestic liquidity at record highs.
In our view, the Nifty could move towards the 30,000 zone over the next 8–9 months as momentum returns across sectors, he added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
