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The announcement of a major trade deal between India and the United States has eased market fears and improved investor sentiment, market experts said during a discussion with Zee Business Managing Editor Anil Singhvi.

Experts said the deal has reduced uncertainty related to tariffs, improved confidence among investors, and could support market stability in the coming months. However, they cautioned that the actual impact will depend on the details of the agreement and its implementation.

Market expert Madhu Kela said the trade deal has helped remove a key fear that was weighing on markets. “There was a fear in the market about what would happen if relations with the US deteriorated,” Kela said.

“America is India’s largest trading partner and also the biggest source of FDI and FII investments. That fear has now gone.”

He said the improvement in sentiment was visible in market behaviour. “The mood is changing from selling on rallies to buying on declines,” he said. “That is a big shift in market psychology.”

Kela added that the recent period had been challenging for retail investors, especially in midcap and smallcap stocks. “In many stocks, corrections of 40 to 60 per cent were seen. Holding stocks in such a phase needs confidence,” he said.

On whether the market could retest the lows seen on Budget Day, Kela said those levels may not break easily unless there is a major global shock.

“My feeling is that the lows made after the Budget should not break easily,” he said. “Unless there is a big global event or some negative surprise in the trade deal details.”

He said leverage in the system has reduced over the past month, and significant selling has already taken place. “That makes the market lighter and more stable,” he added.

Kotak Mutual Fund Managing Director and CEO Nilesh Shah said the deal has clearly improved sentiment, but fundamentals will depend on the finer details.

“There was a sword hanging over equity, currency and rate markets regarding US tariffs,” Shah said. “That uncertainty is now removed, which is positive for sentiment.”

However, he cautioned against assuming a broad-based fundamental impact immediately. “Today, all stocks have gone up due to short covering and fear of missing out,” Shah said. “But the real impact will be clear only after we see the details.”

He said sectors that were affected by tariff concerns could benefit if the terms are favourable. “Textiles, aquaculture and gems and jewellery could see improvement,” he said. “But the devil is always in the details.”

On asset allocation, Shah said investors should avoid aggressive positioning. “Valuations are not cheap enough to go overweight on equities,” he said. “Earnings growth will decide returns.”

He said recent gains should be seen in perspective. “The market has delivered around 4 per cent in two days, which could otherwise take four months,” Shah said.

He advised investors to stick to a neutral equity allocation. “Follow asset allocation and avoid investing due to FOMO,” he said. “This was our view before the Budget and remains the same.”

However, he said, selective sectoral opportunities exist. “Investors can be overweight in consumer discretionary, cement, chemicals and textiles,” Shah said.

Investor Vijay Kedia said markets may remain selective even if sentiment improves. “Indices don't need to double or triple from here,” Kedia said. “Every bull market has sector rotation.”

He said past market cycles showed that while index movement can be limited, stock-specific opportunities can still deliver strong returns. “During earlier cycles, indices consolidated while many midcap and smallcap stocks multiplied,” he said.

Kedia said infrastructure, metals and select banks could offer opportunities. “Without infrastructure and credit growth, India cannot become a $10 trillion economy,” he said.

He said investors should focus on quality businesses and avoid panic selling. “If you bought good companies after proper homework, do not sell just because prices have gone up 10 to 20 per cent,” he said.

Kedia cautioned retail investors against selling too early after a recovery. “When prices recover, investors feel relieved and rush to sell,” he said. “But good stocks often do not come back to lower levels.”

He said investors should sell only if fundamentals have deteriorated. “If a company is fundamentally weak, selling at any price is fine,” he said. “But do not sell quality stocks in a hurry.”

On foreign investor flows, Kela said currency stability could play an important role. “FIIs are more worried about currency than equity markets,” he said.

He said the recent movement in the rupee could support sentiment. “If currency stability is seen, FII selling may stop first,” he said. “Gradual buying could follow in select stocks where valuations have corrected.”

Kela said India is currently underweight in many global portfolios. “Some selective FIIs may return as comfort increases,” he said.

Kela said retail investor confidence could improve as portfolios recover. “Most retail portfolios are still down 15 to 30 per cent,” he said. “As midcap and smallcap stocks recover, confidence will return.”

He said inflows into mutual funds are unlikely to drop sharply. “This will be a gradual process,” he said. “Markets never change overnight.”

Shah said markets have already priced in several positive policy measures. “The market is near all-time highs because many positives are already discounted,” he said.

He said future returns will depend on earnings delivery. “Returns will have to be moderated,” Shah said. “Investors need to identify companies that can convert opportunities into profits.”

He cited textiles as one such opportunity area. “Export duty parity has opened an opportunity,” Shah said. “But companies must execute well to benefit.”

All experts stressed the importance of patience and discipline for investors. “Time in the market makes money,” Shah said. “Timing the market is very difficult.”

Kedia said investors should either develop stock-picking skills or rely on professional fund managers. “If you cannot pick stocks yourself, use mutual funds,” he said.

Kela said sentiment has turned positive, but expectations should remain realistic. “This is a big day for sentiment,” he said. “But investors should stay selective and patient.”

The experts agreed that while the India-US trade deal has reduced uncertainty and improved confidence, sustainable market gains will depend on earnings growth, sector performance and careful stock selection.