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Informist, Tuesday, Feb. 3, 2026

 

By Eshitva Prakash

 

MUMBAI – Benchmark equity indices are expected to rise further Wednesday, supported by a positive sentiment around domestic and foreign portfolio investors after the US slashed import tariffs on India, analysts said. Foreign investors are seen covering their short positions further as the overhang of punitive tariffs reduces and as the rupee is expected to slightly recover. However, despite the significant rise Tuesday, analysts are still awaiting the contours of the deal to assess sector-specific impact before recommending large bets. Several reports claimed that under this deal, India would reduce most of its import duties from the US to zero, opening its markets to severe competition from the US companies.

 

The White House had imposed a 50% tariff on Indian goods in August, comprising an earlier 25% reciprocal tariff, and a 25% extra punitive tariff on the purchase of Russian oil. Some Indian media reports said the US ambassador to India Sergio Gor has confirmed that the 50% tariff has been cut to 18%. With the reduction in US tariffs, Nomura expects the announced effective tariff rate to fall to around 14.6% from the prior 33.6%.

 

Not all analysts are convinced that foreign investors will come back in force after the announcement alone. The recent depreciation in the rupee hit at sentiment on account of the upward revision in the securities transaction tax, and lackadaisical earnings in the December quarter may deter strong foreign investors, analysts said. "I would advise waiting for the fine-print to come out before making big bets," Sanjeev Khandelwal, a part of BNK Securities' management team said. The analyst also expects substantially higher GDP growth in 2026-27 (Apr-Mar) as benefits from the tariff cut start almost immediately. However, the analyst said he will remain cautious until the announcement is made formally, calling the current communication on tariff "single-sided." 

 

However, with growth expected in several sectors, analysts see a potential of improved earnings for companies and a possible upward revision in the GDP estimates for FY27. "The trade deal between India and the US is an opportune time to buy equities," Business Standard reported, quoting brokerage Bernstein. The brokerage expects the Nifty 50 to reach 28100 levels by year-end, according to the report. This is 9% away from the current closing level.

 

Brokerages expect strong benefit for labour-intensive businesses such as gems and jewellery, seafood, and textiles, among others. However, no crude oil imports from Russia will impact the margins of companies like Hindustan Petroleum Corp., which continues to source crude oil from Russia, an analyst from a domestic brokerage said. Another analyst from a different brokerage expects a surge in sales for automobile ancillary companies such as Sona BLW Precision Forgings, Balkrishna Industries, and Samvardhana Motherson International. Tariffs imposed under Section 232 on sectors such as automobile, steel, and aluminium remain unchanged.

 

The bearish tone in the market has largely dissipated and this positive development has led to another trend-reversal, this time indicating a strong bullish shift, said Jatin Gedia, vice-president of technical research at Teji Mandi Investment Technologies. The analyst believes that market volatility was sparked by weekly expiry of derivative contracts, and expects a clearer picture from technical charts on Wednesday. The Nifty 50 is expected to face strong resistance at 26000 points and find support at 25625 points. The 50-stock index ended 25727.55 points, up 2.5%.

 

Analysts have said it was unlikely that India will open up its sensitive markets such as dairy and agriculture. India's average applied tariff on the US was 17%, Nomura said, and the brokerage believes that India's offer on tariffs will mimic its offer to the European Union. Other than foreign portfolio investors' trading activity, investors will focus on December quarter earnings of Bajaj Finserv and Trent, among other companies.  End

 

Edited by Akul Nishant Akhoury

 

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