 "India-UK trade deal fails to lift stocks as earnings concerns dominate mkts")
The much-anticipated signing of the Comprehensive Economic and Trade Agreement (CETA) between India and the UK did little to buoy Indian equity markets, as a broad sell-off overshadowed sector-specific optimism. While companies across textiles, pharmaceuticals, jewellery, automotive, and agriculture are positioned to benefit from tariff reductions under CETA, most stocks in these sectors closed lower on Friday.
The decline was driven by pervasive concerns over weak earnings, which sent the Nifty Smallcap 100 index down by more than 2 per cent. Several sectors are poised for long-term growth from CETA; however, they did not see immediate stock gains as sentiment remained risk-averse, with investors focusing on disappointing earnings.
The overall markets were dull as FPIs were net sellers. Mid- and small-cap stocks have been experiencing a selling spree over the last few days. "The US tariffs are more important than the UK tariffs. One has to see what kind of treaties our competing countries, such as Vietnam and China, are entering into. The kind of tariffs imposed on them will be more important than what is levied on India," said Deepak Jasani, former head of retail research at HDFC Securities.
Jasani added that the corporate results will be the immediate trigger for market movement.
"The first batch of results is not very positive, and one has to see how the rest of the listed universe fares," he said.
The Nifty Healthcare index stood out, rising 0.7 per cent—primarily fueled by a 3.2 per cent surge in Cipla. Healthcare and pharma stocks were the only Nifty sectoral indices to end in positive territory. Domestic liquor shares, particularly Som Distilleries & Breweries, came under pressure due to fears that CETA could intensify competition by easing market access for international brands.
Despite short-term market weakness, analysts remain optimistic about companies well-positioned in export-oriented sectors, as they stand to realise gains as tariff reductions take effect and trade flows gradually increase.
"The stocks will react to the earnings, and these benefits will need to be reflected in terms of revenue and profit growth. Moreover, the India-US trade deal is the most anticipated event," said Pramod Gubbi, founder of Marcellus Investment Managers.