Investor sentiment in Indian equities has improved following the India–US trade deal, according to brokerage Bernstein. The brokerage said the agreement has lifted market confidence, leading to a visible improvement in sentiment.
Bernstein said the change in market mood is expected to drive gains in equities, with the brokerage attributing the anticipated upside primarily to sentiment rather than a sharp improvement in corporate earnings. It noted that recent quarters were marked by weak earnings performance and a subdued Union Budget, which had kept markets under pressure.
According to Bernstein, the Nifty 50 index could rise to 28,100 points by the end of 2026, implying an upside of about 8 percent from current levels. Bernstein Managing Director Venugopal Gare, in a report co-authored with Nikhil Arela, said the index could first move towards the 26,500 level, after which a gradual strengthening may be seen, with 28,100 remaining the year-end target.
The brokerage said the expected market uptrend would be driven by improved sentiment rather than earnings growth, as weak results and large-scale fundraising by companies could limit the scope for a significant earnings recovery in the near term. Bernstein cautioned that heavy fundraising by large companies could create pressure on stock prices, which may restrict returns despite any near-term rally.
From a sectoral perspective, Bernstein said banking and financials, information technology, and telecom remain its preferred sectors. The brokerage said these sectors are not directly and adversely impacted by the trade deal’s conditions and could benefit from improved global sentiment.
Bernstein added that some manufacturing- and trade-linked stocks may also see limited improvement, although the brokerage maintained a selective approach.
On banking and financials, Bernstein said the sector stands to benefit from domestic economic conditions. It said currency stability, the possibility of interest rate cuts, and improved liquidity could support the sector. According to the brokerage, the trade deal could provide support to the rupee, which may create room for interest rate cuts.
Bernstein said lower interest rates could support loan growth and provide earnings stability for banks, making financials a preferred sector.
The brokerage maintained its overweight stance on the IT sector, citing its b linkage with the US market. Bernstein said improved India–US relations could reduce the risk of additional scrutiny or new taxes on IT services. It noted that a significant portion of IT companies’ revenue is derived from the US market, and greater policy clarity following the trade deal could support growth over the medium to long term.
Telecom was also identified as a preferred sector, with Bernstein noting that while the trade deal has no direct impact on the sector, improved sentiment and a stable economic environment could support investor confidence. The brokerage said rising data consumption and the expansion of the digital economy could help maintain revenue stability for telecom companies.
Bernstein advised caution on sectors such as automobiles and metals, where different taxes may continue to apply. It said overall tax rates are likely to remain in the 20–25 percent range, placing India on par with ASEAN countries and in a relatively ber position compared with China, while maintaining that risks in these sectors should not be ignored.
The brokerage said India’s returns in dollar terms had been weak in recent months due to rupee depreciation. It expects the trade deal to provide support to the rupee, which could aid foreign investment inflows and help contain inflation. According to Bernstein, currency stability could increase the likelihood of interest rate cuts, supporting broader economic conditions.
