India-US trade deal: Stock market rally ahead? What analysts say

The India-US trade deal is set to lift domestic equities on Tuesday, as analysts and economists said the revised US tariff on Indian goods at 18 per cent, down from 25 per cent earlier, along with the removal of the additional 25 per cent levy linked to Russian crude oil imports, should make India more competitive than its peers. They said the move could also support a recovery in the rupee and revive foreign equity inflows.

"We believe that this is a great boost for the already sombre sentiments as Indian goods will now be able to compete on the US soil. However, one must also remember that exports to the US is a small part of our $ 4 trillion GDP. So yes the trade deal is good for the economy and markets in the short term but one must not expect miracles out of it," said Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities.

Sheth said the market is expected to see gap up, as there are many short positions in the system that will get squared off. "But we must look for fresh long built up for the trend to sustain," he said.

Garima Kapoor, Deputy Head of Research and Economist at Elara Capital said her estimates indicate policy implied effective tariff rate on India post deal is at 14.1 per cent, with Russia-related tariffs removal.

The 18 per cent tariff brings the rate in line to India’s peers that have nearly 20 per cent rates, she said adding that the removal of Russian oil related penalty is likely to generate positive tariff differential for India. 

When combined with the recently concluded India–EU trade agreement, this potentially represents one of the strongest external growth stimuli for the Indian economy in 2026, said Trideep Bhattacharya, President and CIO Equities Edelweiss MF.

Shashank Udupa, Fund Manager at Smallcase, said securing a trade deal at lower tariffs than many Asian counterparts will boost corporate profitability. He added that India has effectively secured two major trade deals in the past two months, with the US and the EU, reinforcing its shift toward becoming a manufacturing-first nation. 

Sonam Srivastava, Founder and Fund Manager at Wright Research PMS said export-oriented segments such as IT services, pharmaceuticals, specialty chemicals, auto ancillaries, and select engineering goods stand to benefit the most. 

"Lower tariff barriers improve price competitiveness for Indian firms in the US market, which remains India’s largest export destination. Over time, this could translate into better order inflows, margin stability, and higher capacity utilization. Domestic manufacturing themes tied to global supply chain diversification also get reinforced," she said.

Emkay Global on Tuesday said the conclusion of the India-US trade deal should trigger a strong rally in Indian stocks. It suggested a Nifty target of 29,000 for 2026 end. 

Emkay Global said the development should result in strong FPI buying on the back of reasonable valuations and an earnings recovery.  Given the large underperformance of India, undervalued rupee, FII flows could come
back and be a significant boost to markets in the near term, said Nuvama Institutional Equities.

Emkay said the trade deal directly benefits a narrow part of the market: It sees chemical stocks such as SRF, Navin Fluorine, Gujarat Fluoro, Aarti and Atul as beneficiaries. In the textiles sector, it sees Gokaldas and Welspun Living among major beneficiaries.  In the auto Ancillaries segment stocks such as Suprajit, Bharat Forge and Sona Comstar could gain. 

"There could be a negative impact on OMCs and Reliance if India stops buying Russian crude," it said.