Trade talks fuel market rally: Time to rework your strategy?

Mint

11-06-2025

Indian stock markets surged on June 11 as hopes of a near-term trade agreement between India and the United States lifted investor sentiment. Ongoing bilateral talks in New Delhi between trade officials from both nations focused on enhancing market access, easing digital trade restrictions, and reducing customs barriers. With the July 9 tariff deadline looming, policymakers expressed confidence that a deal could be finalized soon—fueling a rally in the benchmark indices and prompting market experts to share their strategic investment advice.
Over the past week, US and Indian officials engaged in extensive dialogue aimed at resolving long-standing trade disputes and improving bilateral commerce. The discussions, which remain confidential, were described as productive by an Indian government official. India's Foreign Minister noted that the country was "hopeful" of sealing an agreement before the current 90-day pause on reciprocal tariffs expires on July 9.
Sensex surged 391 points to reach an intraday high of 82,783.51, while Nifty rose 118 points to 25,222.40, reflecting investor optimism. A potential breakthrough in trade relations, particularly with the US—formerly India's largest trading partner—could significantly improve the export landscape and ease tariff-related concerns. Despite a persistent trade deficit of $45 billion, both sides aim to push bilateral trade to $500 billion, although India is cautious about concessions in sensitive sectors like agriculture.
Saurav Ghosh, Co-founder of Jiraaf, believes the market may remain volatile until the deal is finalized, but any resolution would be a net positive. 'A successful agreement—even with India taking a more flexible stance—could boost consumer sentiment, increase corporate capex, and attract new investments. For long-term investors, this reinforces the importance of staying invested in equities and mutual funds through a buy-and-hold strategy,' he said. Ghosh also advised cautious sectoral allocation, especially into beneficiaries of a trade-driven rally, while using fixed-income instruments to manage volatility.
Anil Rego, Founder and Fund Manager at Right Horizons PMS, said the deal could unlock new opportunities for exporters, particularly in digital services and high-value manufacturing. 'Investors are hopeful about an interim pact by June. If achieved, this could reduce trade friction and strengthen economic ties. Combined with the RBI's recent policy support, including a 100bps rate cut and ₹ 2.5 trillion liquidity injection, this sets a favourable backdrop for Indian equities,' Rego said.
According to Mayank Jain, Market Analyst at Share.Market, export-oriented sectors stand to benefit the most if trade flows improve. 'Pharma, specialty chemicals, and IT players such as Dr. Reddy's, Divi's Labs, and Infosys could see earnings upgrades,' he said. However, he cautioned that agriculture and segments of the auto industry may face pressure due to potential tariff reductions for US imports. Jain also flagged uncertainties stemming from recent US tariff hikes on Indian steel and aluminum and the 26 percent reciprocal tariffs temporarily suspended until July 9.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.