From Bernstein to Nomura: Brokerages give thumbs up to India-US trade deal

Nifty will likely head back to 26,500 and settle there as focus returns to earnings, analysts at Bernstein said in a note

Most global and Indian brokerages have given thumbs up to the India–US trade deal, announced on Monday, even as finer details are awaited.

 

The markets, too, acknowledging the development, saw a sharp rise with the Sensex skyrocketing 4,200 points to hit a high of 85,871.73 during intraday trade.

 

Here’s how leading brokerages have interpreted the trade deal.

 

Goldman Sachs

 

With the reciprocal tariffs on India’s exports to the US now lowered, the current account deficit is likely to narrow by around 0.25 per cent of gross domestic product (GDP) in 2026 to 0.8 per cent of GDP.

 

 

In addition, if capital flows recover in CY26 on conclusion of the India-US trade deal, it would ease some pressure on the rupee. This would result in downside risk to our current US dollar/rupee 12-month forecast of 94.

 

The Reserve Bank of India (RBI) is at the end of the easing cycle and will keep policy repo rate unchanged in CY26 at 5.25 per cent.

 

Morgan Stanley

 

The trade deal places India a tad better than other Asian emerging market (EM) economies from an export competitiveness perspective. This removes a key source of uncertainty with respect to the growth outlook and bodes well for external demand to support the growth trend, with improving business sentiment likely to spur capital expenditure (capex).

 

We expect growth to track at 7.6 per cent in FY26 and 6.5 per cent in FY27, with broad-based strength.

 

Bernstein

 

We see this as an appropriate time to call for a trading buy on India. With markets weakened by sluggish earnings and a lacklustre Budget, improving sentiment (not earnings) should drive the move. Nifty will likely head back to 26,500 and settle there as focus returns to earnings. Our year-end target of 28,100 and our -full year rating of 'neutral' stays unchanged.

 

Sector-wise, financials, information technology (IT), and telecom are the ways to participate in the market rebound as we do not see anything in the (trade deal) fine print impacting these sectors.

 

Nomura

 

We expect foreign portfolio (FPI) flows, and importantly, foreign direct investment (FDI) commitments into India to gradually reverse.

 

After a weak FY26, we are projecting a balance of payments surplus of around $7 billion in FY27.

 

 The reduction in tariffs to 18 per cent is a significant change that will reduce margin pressure on labour-intensive export segments.

 

With this deal, Indian exporters are now at par with competitors in Southeast Asia. And, trade in products, such as toys and furniture, which was previously being diverted to countries like Vietnam, may now flow back to India.

 

BofA Securities

 

India’s opening of its markets to more US products will enable higher technology imports and could also spur FDI from the US over time.

 

Even without accounting for the rupee weakness persisting to some extent, the impact of 18 per cent tariffs will be blunted. But by our estimates, accounting for Section 232 tariffs on all products like steel, aluminum and automobiles staying in place, we estimate the effective tariff rate on India might be just around 12-13 per cent. This is down from almost 30-35 per cent previously.

 

The RBI is now done cutting rates, but will continue to manage its liquidity provisions carefully to ensure that rate transmission remains active.

 

Motilal Oswal

 

The market will now begin to accord correct weight to the improving trajectory of corporate earnings growth, which has shown successive improvement over the quarters with an improving earnings revision trend.

 

We expect around 12 per cent earnings growth for Nifty over FY25-27E. Valuations for Nifty at 20.4x remain palatable (below the 10-year average of 20.8x), and with the latest turn of events, it has the potential to expand appreciably.

 

Key sectoral beneficiaries from the trade deal include auto ancillaries, defence, consumer, textiles, EMS, consumer durables, IT services, financials (second-order beneficiary), and utility companies.

 

Antique stock broking

 

The development is significantly positive for Indian equities as a) The FPI equity flow may reverse (key overhang for the markets for the last 15 months) and b) Support nominal GDP growth by 50–80 bps and result in rupee appreciation.

 

Accordingly, our March 2027 Nifty 50 target stands at 29,500 (based on 20x FY28 EPS). Our key overweight sectors are financials, capital goods, defence, and consumer discretionary.