D-Street does a jig! India–US trade deal lifts sentiment, but earnings to drive market returns

By

, ET BureauLast Updated: Feb 04, 2026, 06:47:00 AM IST

Synopsis

The India-US trade deal has eased tariff uncertainty, boosting investor sentiment and suggesting market stress may have peaked. While not a game-changer, the agreement is expected to align equity returns with corporate earnings, projected at 12-15% in 2026. Fund managers recommend diversified portfolios, export sectors, and selective mid and small-cap investments.

The India–US trade deal marks a turning point for equities by removing a major source of tariff uncertainty, and lifting investor sentiment, according to top money managers.

They said the worst of the market stress may have peaked for now, but the trade agreement is unlikely to be a game-changer, and returns will ultimately hinge on an earnings revival. Most fund managers expect equity returns in 2026 to broadly track corporate earnings—about 12–15%. They favour diversified portfolios, export-oriented sectors and selective opportunities in midand small-caps.

ET Bureau

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