India–US trade deal to lift market sentiment; fund managers say "It's time for equities"

In a late night post on Truth Social, US President Donald J Trump announced that India and US had come to an agreement on the long awaited trade deal that included a reduction of reciprocal tariffs and non-tariff barriers.

• India-US trade deal cuts tariffs from 25% to 18%, boosting market sentiment
• Fund managers expect equities, rupee, and sectors like textiles to benefit
• Deal seen as reinforcing India's growth momentum and policy reforms

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The announcement from US President Donald J Trump about an India–US trade agreement reducing reciprocal tariffs from 25% to 18% has been welcomed by fund managers, who say it removes a key source of uncertainty for markets and improves prospects for equities, the rupee. In a late night post on Truth Social, US President Donald J Trump announced that India and US had come to an agreement on the long awaited trade deal that included a reduction of reciprocal tariffs and non-tariff barriers.

According to Ramesh Mantri of WhiteOak Capital. markets had been waiting for clarity on timing and terms, and the deal comes at a time when equities are looking attractive after recent budget-related changes and losses in precious metals. He sees sectors such as textiles, chemicals, and engineering goods standing to gain from the reduction in tariffs. “Part of the move is already in the price, but we could still see a near-term upside of around 2%,” he said, adding that the rupee is also likely to benefit. Mantri added

The agreement has also been seen as a reinforcement of India’s broader policy momentum. Navneet Munot, Managing Director and CEO of HDFC Asset Management Company, said it builds on the recent growth-oriented Budget and reforms. “Kudos to our leadership for a successful India–US trade deal that’s anchored in mutual respect, strategic autonomy, and the shared objective of global stability and prosperity. It’s a wonderful news coming on the back of a highly pragmatic, growth-oriented Budget and a series of reforms,” Munot told Moneycontrol.

Nilesh Shah, MD of Kotak Mahindra Asset Management Company, said the agreement has had a volatile path but provides relief for markets. “India–US trade deal has gone through ups and downs like a roller coaster. While devil is in the details, it removes a hanging sword over rupee, equity and rates market. Let us hope that it is a win-win deal for both the countries as they have a lot to gain through cooperation,” Shah said.

In a note, Trideep Bhattacharya, President and CIO–Equities at Edelweiss Mutual Fund, said the tariff reduction came in better than market expectations and could provide a strong boost to growth. “The reduction in tariffs from around 50% to ~18% has come in materially better than consensus expectations. 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,” he said.

Overall, fund managers said the agreement improves visibility for investors and supports sentiment, even as attention now turns to more granular details that will emerge in the coming days to throw light on sector-specific impacts.