Aniket PujariAce investor and market veteran Shankar Sharma says investors should expect moderate returns from the Indian stock market over the medium term, even though the long-term outlook remains bright.
Sharma, while explaining why the domestic market turned flat on Wednesday after a stellar rally on Tuesday, after an India-US trade deal was announced, said that the market seeks more clarity over the deal, and also is cautious because of the unpredictable policies of US President Donald Trump.
“The India-US trade deal is a positive development, but there is still significant uncertainty about the details of the deal. This is keeping the market cautious,” Sharma, who is also the founder of AI-tech firm GQuant, told Mint.
Sharma also highlighted that Trump’s flip-flops on tariff policies remain a key overhang for the market.
“Trump has been unpredictable. We have seen in the cases of Korea and Europe that he can change his tone at any time. This is another factor that can keep the market’s performance muted,” said Sharma.
India and the US have finalised a trade deal which reduces US tariffs on Indian goods from 50% to 18%. Experts believe the deal is a major positive for the Indian economy and many sectors, such as textiles, seafood, chemicals, auto ancillaries, and pharma, may benefit from the deal.
The domestic market reacted sharply to the development, with the Sensex and the Nifty 50 surging by 2.5% on Tuesday. However, the rally fizzled out soon, and the market’s focus shifted back to fundamentals like earnings and valuations, causing market benchmarks to end almost flat on Wednesday.
Market needs fresh triggers
According to Sharma, the domestic market is struggling to sustain gains as it lacks fresh triggers. The Indian market is an ageing bull market, and current macro indicators are not encouraging.
“The Indian stock market is an ageing bull market. We lack fresh triggers to drive the growth. Nominal GDP has been weaker, signalling earnings may remain soft. Indian stock market investors should have moderate return expectations over the medium term,” said Sharma.
The Economic Survey 2025-26, presented on January 29, projected the Indian economy on a stable footing.
The Economic Survey projects real GDP growth in FY27 in the range of 6.8 to 7.2% despite global uncertainties.
Read all market-related news here
Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
