MC Exclusive: India Is Set to Outperform in 2026: Sandeep Tandon on Markets After the Trade Deal

sandeep tandon

• India-US trade deal sparks sharp rally and positive shift in market sentiment
• Export-led sectors like auto, textiles, and FMCG expected to benefit
• Experts advise caution, urging investors not to chase opening-day euphoria

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After months of weak sentiment, foreign outflows and market underperformance, the India–US trade deal has triggered a sharp overnight rally in futures and revived hopes of a broader market turnaround.

In a conversation with Moneycontrol, Sandeep Tandon, founder of Quant Mutual Fund, explains why this moment marks an inflection point for Indian equities, why investors should avoid chasing opening-day euphoria, and how sector rotation and export-led themes could define the next phase of the market cycle.

Q: Do you think the India-US trade deal marks start of a more meaningful market move?

I see this as a genuine inflection point. What was important over the past few weeks is that positioning had become extremely negative. People had given up hope around the Budget period. There was this subconscious feeling that markets are bad and money cannot be made. That is exactly the kind of environment where bottoms are formed.

From September onward, we have started seeing gradual improvement in earnings on a quarter-on-quarter basis. GST benefits will start flowing in more meaningfully. Add to that the trade deal news — it justifies a positive shift in sentiment.

But this does not mean you can blindly buy everything this morning. The easy-money phase is over. This is a phase of PE contraction globally. Expensive stocks will see valuation compression. So stock selection becomes critical.

Q: Do you think this sets the tone for Indian markets to outperform this year?

India has significantly underperformed global equities, especially the US. That creates the base for relative outperformance. My personal call is that India will emerge as an outperformer in 2026. Not because of one event, but because earnings are stabilising, manufacturing momentum is improving and export opportunities are expanding with both the US and EU trade deals. This year will be about sector rotation and stock rotation. You will have to be equally clear about what not to own.

Q: How do you approach the market today?

I would be very cautious about chasing euphoria. This is a sentiment-changer event, not a “buy-anything-at-any-price” moment. Markets had reached a point where people had mentally switched off. Buying momentum was missing.

Now activity will come back. Participation will improve. That itself is positive. But smart money should wait for better entry points rather than rush in at the open.

Q: Which themes and sectors could lead this phase?

Exports are clearly back in focus. With the rupee depreciation and multiple trade agreements getting signed, India’s manufacturing base will strengthen. Export-facing sectors such as auto components, textiles, gems and jewellery, shrimp exporters — all these should see renewed interest. Domestic consumption will also benefit as GST-related advantages fully flow into sectors like FMCG and automobiles.

Q: Do you expect foreign investors to return quickly?

Not overnight. As US markets correct and emerging markets stabilise, money will gradually shift back to India. This is not a switch that flips in one day. But sentiment turning positive is the first step. Also, many global investors operate on “perceived risk”. When uncertainty is high, they step aside. With the trade overhang now easing, that perceived risk premium should reduce.

Q: The direct impact business impact is only for the export sectors, but do you think the large-caps could see a strong bounce as well?

Yes. Reliance Industries, Adani stocks, and even Grasim from Birla’s will all see strong rebound. These are large leadership stocks where sentiment had deteriorated sharply.

For Reliance, concerns around energy exposure and geopolitical risks had created overhangs. Those fears should now ease. For Adani group companies, any meaningful resolution process cannot move forward without a broader country-level trade and diplomatic reset. Now that the macro stage is set, these stocks could see renewed interest as sentiment normalises.

Q: How do you see earnings shaping up in the near term?

I am not expecting anything extraordinary immediately. This is a gradual recovery. Some companies will surprise positively. March quarter numbers could be better because GST benefits and operating leverage will start showing up more clearly in FMCG and auto. With the trade issue settling and two months left in the quarter, the outlook improves incrementally. But, let’s be clear, this is not about overnight riches. It is about positioning for the next cycle. India’s export confidence, earnings visibility and business sentiment are resetting — and that is where the real opportunity lies.