India-US trade agreement: According to a story published in Mint today, Washington and New Delhi are nearing an agreement on a long-standing trade agreement that might lead to the reduction of tariffs on India from a hefty 50% to 15–16%.
India-US trade deal: The Indian stock market has recovered its momentum after a difficult few months. And analysts think the "sky is the limit" for the Indian stock market given the potential for a trade agreement between the US and India.According to a story published in Mint today, Washington and New Delhi are nearing an agreement on a long-standing trade agreement that may reduce India's tariffs from a hefty 50% to 15–16%.
According to the source, US President Donald Trump and Indian Prime Minister Narendra Modi will announce the agreement during the ASEAN Summit later this month.
What is up for negotiation?
What is up for negotiation?
According to several experts quoted in the report, the US now seems prepared for a deal with India, particularly in light of China's hardening position. Washington is being forced to create alternate supply chains as a result of China's increased control over rare-earth exports and the escalating US-China trade dispute.
Furthermore, Washington is anticipated to offer energy trade benefits in exchange for India reducing its energy imports of Russian oil and possibly permitting the import of ethanol in order to facilitate the bilateral trade agreement.
Approximately 34% of India's current crude imports come from Russia. On the other hand, the United States currently supplies around 10% (by value) of the nation's oil and gas needs.
In response to growing domestic demand from the ethanol, dairy, and poultry feed industries, India is also thinking about raising the quota for importing non-GM maize from the US.
The Gift Nifty indicates a gap-up beginning.
In response to growing domestic demand from the ethanol, dairy, and poultry feed industries, India is also thinking about raising the quota for importing non-GM maize from the US.
The Gift Nifty indicates a gap-up beginning.
The Gift Nifty had strong trading today against the backdrop of a trade agreement between the US and India. Even though the Indian stock market is closed today, October 22, in observance of Diwali Balipratipada, it is possible that tomorrow may see a gap-up start.
Gift Nifty futures were up about 377 points, or 1.45%, at 26,300 as of 3.40 pm (IST), indicating a bullish start to the October 23 trading session for the Indian stock market.
Tomorrow's gap-up start might send the Nifty 50 index, which is currently only 1.5% behind its prior peak of 26,277, to a new high.
Trade deal's probable effects on the Indian stock market
Tomorrow's gap-up start might send the Nifty 50 index, which is currently only 1.5% behind its prior peak of 26,277, to a new high.
Trade deal's probable effects on the Indian stock market
Analysts feel that a favorable outcome to the India-US trade agreement might lift a market overhang.
Despite India's strong macros, including the in-principle India-UK trade deal, a 50-bps rate cut in June, reductions in GST and income taxes, and an upcoming demand-heavy festive and wedding season, the markets have been consolidating within a narrow range for more than a year, according to Harshal Dasani, Business Head, INVAsset PMS. "The trade agreement between the US and India has been the lone overhang. Dasani believed that lowering tariffs to 15–16% in Washington might be the missing trigger.
Sunil Subramaniam, a strategic advisor at BayFort Capital and a market veteran, stated that if these rumors are accurate, the FIIs may return. "Then the sky is the limit."
Sunil Subramaniam, a strategic advisor at BayFort Capital and a market veteran, stated that if these rumors are accurate, the FIIs may return. "Then the sky is the limit."
FIIs have been net sellers of stocks valued at ₹147,158 crore so far this year, staying out of the Indian domestic market. Due to FIIs' net purchases of Indian stocks totaling ₹7,362 crore this month, the trend is reversing after three months of selloffs.
According to Wealthmills Securities' Kranthi Bathini, the country and exporters would benefit if tariffs were reduced to 15–16%.
He did, however, advise waiting for clarification and not acting hastily on source-based news. "The storyline was constantly shifting earlier as well. However, it's a wise choice. It would be fantastic for investors and the market if it came to pass," he continued.
According to Wealthmills Securities' Kranthi Bathini, the country and exporters would benefit if tariffs were reduced to 15–16%.
He did, however, advise waiting for clarification and not acting hastily on source-based news. "The storyline was constantly shifting earlier as well. However, it's a wise choice. It would be fantastic for investors and the market if it came to pass," he continued.
Given that domestic liquidity is at record highs and the global risk appetite is still strong, Dasani anticipates a new bull run on the back of any favorable developments on the trade front.
He continued, "We believe that as momentum returns across sectors, the Nifty could move towards the 30,000 zone over the next 8 to 9 months."
He continued, "We believe that as momentum returns across sectors, the Nifty could move towards the 30,000 zone over the next 8 to 9 months."
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