India-US trade deal: Time to buy stocks; Nifty target 28,100, says Bernstein

The trade deal between India and the United States (US) is an opportune time to buy equities, suggest analysts at Bernstein and expect the nifty 50 index to reach 28,100 levels by the year-end, an upside of around 8 per cent from the current levels.

 

"We see this as an appropriate time to call for a trading buy on India. With markets weakened by sluggish earnings and a lackluster 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," wrote Venugopal Garre, managing director at Bernstein in a coauthored note with Nikhil Arela. 

 

 

Significant fund-raising will impair valuations, and limited room for earnings upgrades will cap returns after the trading rebound, analysts at Bernstein said. Sector-wise, Financials, information technology (IT), and Telecom, they said, are the ways to participate in the market rebound, as they do not see anything in the (trade deal) fine print impacting these sectors. "Manufacturing and trade-linked stocks should also see some recovery," they added.

 

US President Donald Trump on Monday announced a trade deal with India, reducing the reciprocal tariff on Indian goods to 18 per cent from 25 per cent. The agreement comes nearly five months after the US imposed 50 per cent tariffs on a host of Indian exports, including a 25 per cent punitive duty for India’s purchase of Russian crude oil.

 

While some sectors (autos, metals, etc.) will still face sectoral tariffs, Bernstein said, the effective rates will likely be in the 20-25 per cent range. "This brings India in line with ASEAN peers and strengthens its position relative to China. The acceleration in the deal appears triggered by the India-EU treaty, which likely pushed the US to reconsider the relevance of high tariffs on India," Garre and Arela wrote. 

 

Bernstein's non-consensus upgrade of IT to overweight as a strategy at the start of 2026 also remains intact. "IT has the largest exposure to the US, and while the deal primarily covers manufactured goods. Our outlook was that improved US-India relations—even if short-lived, would reduce scrutiny on IT services and lower the risk of further punitive actions (such as additional taxes)," Bernstein said.

 

Adding: "India’s USD equivalent returns remain among the lowest in key markets this year, mainly due to weak market performance but also partly due to a massive rupee depreciation in the last couple of months. With a trade deal announced, this will also lend support to rupee and we can see relative stability, providing room for economy boosting rate cuts."