PM Modi and US President Donald Trump
The stock market seems to be moving upwards again. On Monday, the first trading day of the week, the market’s main index Sensex closed at 84,950.95 with a gain of 388.17 points. At the same time, if we talk about the last 5 trading days, the market has registered a spectacular rise of 1,604.47 points. There are many reasons behind the rise in the market, from fundamental to technical. But one thing that is clearly visible is the reduction in global tension. The talks on India-US trade that have been going on for a long time are expected to be completed. Media reports suggest that both countries may announce the final agreement by the end of November.
The 50 percent tariff imposed by America on India has been one of the biggest reasons for fluctuations in the Indian stock market this year. As a potential deal looks closer, could this reverse the trend in the domestic stock market? Let us understand what could be the market movement due to the trade deal.
Impact of trade deal on the market
However, a trade agreement between India and the US could be a big positive step for the market, but its probability largely depends on the market movements. If this agreement brings the tariff between 15-16%, then sectors like textiles, gems and jewelery will get a lot of relief. But this will not bring a big boost to the entire market.
According to Mint report, Ajit Mishra, Head of Research, Religare Broking said that this will definitely be a good step. Psychologically, some positive reaction may be seen in the market. But recent market movements suggest that some of this expectation has already been factored into prices. According to Mishra, purchases may increase in those sectors which were in decline till now. Like companies manufacturing clothes, gems, jewelery and electronics. Especially those companies which export mobile phones to America can benefit. Therefore, the rise will not be seen in the entire market but only in some selected sectors.
This sentiment will work
Shrikant Chauhan, Head of Equity Research, Kotak Securities, believes that the tariff can be fixed between 1525%. But if the tariff remains above 25%, market sentiment may weaken. On the contrary, a tariff of less than 15% could lead to a strong market boom. Chauhan said that if the tariff remains less than 20%, then big export sectors like pharma, textiles and gems and jewelery will benefit. For the IT sector, if President Trump has said that he will not impose strict rules on H-1B visas, then it is a big positive sign for him. He believes that due to strong tech and BFSI sector, Nifty 50 can go up to around 27,000.
He said that even though the earnings may have been slow, the results of the companies are as expected and better performance is expected in the third quarter. Global signals are also stable, so the market environment looks positive. If the India-US trade deal is announced in November, it will come at a time when the domestic market is already improving. After the good results of the second quarter, the earnings of the third quarter are looking stronger and the fundamental condition of the economy is also good.