Why Markets Haven’t Reclaimed Record Highs Despite the India-US Trade Deal — Analysts Explain

Introduction

The much-anticipated India-US trade deal was expected to be a gamechanger for Indian equities. Tariff cuts and stronger bilateral ties promised to boost exports, sentiment, and foreign investment.

Yet despite these positives, India’s benchmark indices — the Nifty 50 and BSE Sensex — remain below their all-time highs. Traders and investors are asking: What’s holding markets back?

The answer lies in a mix of macro challenges, execution uncertainty, earnings momentum concerns, foreign investor behavior, and valuation dynamics that have tempered market enthusiasm. Let’s unpack these in detail as analysts see them.

1. Trade Deal Benefits Are Seen as Long-Term, Not Immediate

One big reason markets haven’t sprinted to record highs is that the trade deal’s benefits are expected to unfold gradually, not instantly.

Analysts from HSBC and others point out that the current India-US framework isn’t a traditional free trade agreement that immediately eliminates all trade barriers.

Instead, it’s a sector-by-sector, phased engagement with benefits accruing over time through increased capital flows and supply chain adjustments. This slows the translation of trade optimism into near-term earnings growth and broad market momentum.

Key points:

• Markets crave near-term catalysts, like strong earnings and clear profit growth.
• Incremental trade gains may not move the needle on valuations quickly.
• Investors are cautious until they see order books, revenue impacts, and exports translate to corporate results.

2. Implementation Uncertainty and Execution Risks

While the deal has been announced, the actual implementation remains uncertain. That’s denting market conviction.

Senior analysts like Vaqarjaved Khan (Angel One) highlight that markets are hesitant because key conditions — such as India’s commitments on energy imports and agriculture market access — could face domestic political resistance or take time to execute fully.

Why it matters:

• Investors don’t price in outcomes that are not yet certain.

• Without clarity on timelines and specifics, markets stay cautious.

• Political debates, regulatory hurdles, and negotiation extensions can delay benefits.

3. Corporate Earnings Momentum Is Weak

Stock markets don’t just rise on headlines; they rise on earnings growth.

Despite trade optimism, corporate profits across many sectors have remained subdued. Analysts note that without clear and strong earnings momentum, markets are reluctant to break records.

Siddharth Maurya, founder of Vibhavangal Anukulakara, stressed that earnings momentum is yet to pick up, keeping markets from sustaining a breakout rally.

Challenges hurting earnings:

• Global economic pressures have weighed on demand.
• Certain sectors like IT have struggled amidst global tech competition.
• Domestic issues (like the securities transaction tax debate) have added headwinds.

4. Foreign Institutional Investor (FII) Outflows Have Dampened Appetite

One of the strongest performance boosters for Indian markets historically has been foreign capital inflows. However:

• FIIs have been net sellers, withdrawing billions from Indian equities over recent quarters.
• Even after the trade deal, many foreign investors remain on the sidelines, waiting for confirmation of impact on earnings and economic policy clarity.

This continued selling pressure keeps overall indices in check and limits upward momentum.

5. Valuations Are Already Priced for Optimism

Markets don’t always go up simply because news is good — they go up when good news is not already priced in.

According to HSBC, Indian equities trade at premiums relative to some emerging market peers, meaning expectations of growth are already factored into prices. Under such conditions, positive developments like trade deals may not produce sharp re-ratings unless they’re backed by substantial earnings improvement.

What this implies:

• Investors are demanding tangible performance over promises.

• “Good news” becomes less market-moving when valuations already reflect optimism.

6. Global Market Risks and Liquidity Conditions Matter

India’s markets don’t move in isolation. Global growth uncertainty, tight liquidity, and geopolitical risks continue to weigh on risk assets.

Many global investors adjust positions based on interest rate expectations, US economic data, and broader risk appetite. In this environment:

• Emerging market flows become volatile.
• Capital tends to favour safer, developed markets during uncertainty.
• India’s markets often underperform peers amid heightened risk aversion.

7. Domestic Macro Uncertainties Remain

Even as trade talks provide a positive headline, several domestic factors also contribute to market caution:

• Budget reactions, including debates on transaction taxes.
• Rupee fluctuations, which influence import costs and foreign investor sentiment.
• Ongoing concerns about inflation and interest rate stability.

These variables create an environment where traders prefer wait-and-see positioning over bold bets pushing indices to record highs.

8. Technical Market Behavior: Profit-Taking and Sideways Movement

Technical market dynamics also play a role. After sharp rallies on optimistic news, markets often undergo profit-taking, where traders lock in gains rather than chase new highs. This creates more sideways movement.

Several sessions saw early gains fade due to profit booking, showing that market participants are cautious and want confirmation before committing fully.

9. The Deal Is Perceived as Non-Binding Framework Rather Than Concrete Agreement

Investors are sensitive to whether a deal is substantive or merely a strategic framework.

The current India-US trade arrangement, while positive, has elements seen as intent rather than legally binding commitments — particularly around the significant $500 billion procurement target India aims for. Without a solid, enforceable agreement, markets remain guarded.

Putting It All Together: Why Markets Haven’t Broke Records Yet

Let’s summaries the key factors analysts cite for why Indian markets remain below record highs even after the India-US trade deal:

Factor	Why It Matters
Delayed Implementation	Markets don’t price in gains that might take time.
Weak Earnings	Profits drive valuations, weak momentum limits upside.
FII Outflows	Capital flight dulls buying pressure.
Valuations Priced for Optimism	Good news may already be reflected.
Global Risks & Liquidity	External conditions influence flows and sentiment.
Domestic Macro Issues	Rupee, policy uncertainty, taxes affect confidence.
Profit-Taking	Technical resistance from traders reduces momentum.
Perceived Deal Uncertainty	Investors want concrete, enforceable commitments.

Together, these forces explain why markets have been cautious rather than euphoric.

What Could Trigger Record Highs in Future? Analysts Weigh In

Despite current caution, analysts also offer insights into what could push markets to fresh records:

✅ Stronger Corporate Earnings

If companies report consistent, broad-based profit growth — especially export-linked sectors — confidence could shift significantly.

✅ FII Return

Sustained foreign investor inflows would provide liquidity and upward pressure.

✅ Clear Implementation of Trade Benefits

As the India-US deal yields measurable results — export growth, real investment flows, and supply chain wins — markets may re-rate.

✅ Improved Global Liquidity and Risk Appetite

If global conditions soften — with stable interest rates and lower risk aversion — emerging markets like India could outperform.

✅ Policy Certainty

Clear, supportive domestic policies on growth, taxation, and investment ease could bolster confidence.

Many global brokers (e.g., Goldman Sachs, Morgan Stanley) have expressed bullish medium-term views that depend on these catalysts materializing.

Frequently Asked Questions (FAQ)

1. Didn’t the India-US trade deal boost market sentiment?

Yes, it did lift sentiment initially, but the sustained impact on markets requires clarity on execution, earnings growth, and capital flows — which are still evolving.

2. Are markets ignoring the deal?

Not ignoring, but investors see the benefits as structural and gradual rather than immediate — so indices stay cautious until profitability and flows confirm the story.

3. Why are foreign investors still selling?

Foreign institutions often react to global liquidity conditions, risk shifts, and earnings outlooks. Without clear signals of profit acceleration, they remain cautious.

4. Will the deal eventually help markets hit new highs?

Most analysts believe it can, but only after the trade deal’s benefits are reflected in corporate results and economic data.

5. Are valuations too high for markets to go up?

Some analysts suggest stocks already reflect optimistic future growth, so further upside needs more than positive headlines. Real earnings and capital inflows would help justify higher valuations.

Conclusion: Markets Need More Than Good News

In summary, the India-US trade deal is an important positive development for the Indian economy and markets. Yet, markets are not single-news driven instruments — they respond to fundamentals, clarity, corporate earnings, global capital flows, and policy outcomes.

Right now:

• The trade deal is valuable, but long-term in impact.
• Markets are waiting for execution and earnings proof.
• Investor caution persists due to external and domestic uncertainties.

Until these conditions evolve positively — especially with stronger earnings and clearer implementation of trade advantages — markets may continue trading below their all-time highs even as sentiment improves.

1 India-US trade deal markets, markets below record highs

‘Total Surrender’: Farmer Outfits Slam US Trade Deal, Call for Nationwide Protests and Piyush Goyal’s Resignation

Introduction: A Trade Deal That Sparked a Storm

The newly announced India–US trade deal has triggered a fierce backlash across India’s farming belt. Farmer outfits, trade unions, and agriculture activists have slammed the agreement as a “total surrender” to American interests, warning that it could devastate Indian agriculture, weaken the Minimum Support Price (MSP) system, and flood domestic markets with subsidised US farm produce.

Within hours of the deal’s details emerging, major farmer unions announced nationwide protests, road blockades, and a renewed agitation reminiscent of the 2020–21 farm law movement. 

Several groups have gone a step further, demanding the resignation of Commerce and Industry Minister Piyush Goyal, accusing him of compromising farmers’ interests under pressure from Washington.

The controversy has reignited old fears, reopened political fault lines, and raised a critical question: Is India’s farm sector being sacrificed at the altar of geopolitics and trade diplomacy?

 

What Is the India–US Trade Deal About?

While the government has described the agreement as a “strategic economic partnership”, farmer organisations say the fine print tells a different story.

Key Elements of the Deal (As Flagged by Farmer Groups)

• Lower import barriers for US agricultural products
• Greater access for American dairy, corn, soybean, apples, almonds, and poultry
• Commitments that could restrict India’s ability to raise tariffs
• Pressure to align with US-style trade and subsidy norms
• Indirect impact on MSP, procurement policies, and public food distribution

Government officials argue that the deal will boost exports, attract investment, and strengthen India’s global standing. Farmers, however, say it tilts heavily in favour of the US, whose agriculture sector enjoys massive subsidies.

 

‘Total Surrender’: Why Farmers Are Furious

Farmer outfits have used unusually strong language, calling the agreement:

• “A death warrant for small farmers”
• “A corporate-driven surrender”
• “Worse than the repealed farm laws”

Subsidy Imbalance: The Core Fear

US farmers receive billions of dollars in direct and indirect subsidies, allowing them to sell produce at artificially low prices. Indian farmers, in contrast, operate with:

• Rising input costs
• Limited insurance coverage
• Weak price protection
• Climate risks

According to farmer unions, opening Indian markets to US produce is like forcing a bicycle to race a Formula 1 car.

 

Threat to MSP and Food Security

One of the biggest red flags raised by farmer leaders is the possible dilution of the Minimum Support Price system.

Why MSP Matters

• MSP ensures price stability for farmers
• Supports procurement for PDS and food security
• Acts as a safety net during price crashes

Farmer groups fear that international trade commitments may be used to argue that MSP distorts markets, inviting pressure from the US and global trade bodies to curb or dismantle it.

“Once MSP is weakened, farmers are finished,” said a senior union leader. “This deal pushes us closer to that cliff.”

 

Dairy Sector on Edge

The dairy sector, employing over 80 million Indians, is particularly alarmed.

What Farmers Are Worried About

• Entry of US dairy giants
• Differences in animal feed practices
• Lower production costs in the US
• Impact on small milk producers

Indian dairy farming is dominated by small households, not corporations. Farmer outfits argue that even limited US access could crush cooperative models like Amul and destabilise rural incomes.

 

Nationwide Protests Announced

In response, farmer organizations have announced a multi-phase protest plan.

Protest Strategy

• Nationwide demonstrations
• State-level tractor rallies
• Sit-ins at district headquarters
• Marches to Raj Bhavans
• Potential blockade of highways and rail routes

Unions have warned the government not to underestimate farmers’ resolve, reminding authorities that year-long protests forced the repeal of farm laws in 2021.

 

Demand for Piyush Goyal’s Resignation

The call for Piyush Goyal’s resignation has become a rallying point.

Why Goyal Is Being Targeted

• He led trade negotiations with the US
• Farmers accuse him of ignoring stakeholder consultations
• Allegations of prioritizing corporate interests
• Perception of secrecy around deal details

Farmer leaders claim that agriculture was bargained away without farmer consent, calling it a betrayal of trust.

 

Government’s Defense

The government has pushed back strongly against the criticism.

Official Position

• No compromise on MSP or food security
• Indian farmers will gain export opportunities
• Safeguards exist for sensitive sectors
• Deal strengthens India’s global leverage

Officials argue that fearmongering is being used for political gains and insist that India has not agreed to anything that harms farmers.

 

Opposition Parties Join the Chorus

Opposition parties have seized the moment, accusing the government of:

• Selling out farmers
• Bowing to US pressure
• Repeating mistakes of the farm laws era

Several leaders have demanded that the agreement be tabled in Parliament, debated openly, and referred to a parliamentary committee.

 

Economic Experts Divided

Economists are split on the deal’s impact.

Supporters Say

• Integration boosts long-term competitiveness
• Export-oriented farmers may benefit
• Strategic alignment with the US is crucial

Critics Warn

• Small farmers will bear the cost
• Market shocks could be severe
• Rural distress may intensify
• Social unrest could rise

 

Echoes of the Farm Law Protests

The current unrest has revived memories of the historic farmers’ agitation against the three farm laws.

Similarities

• Lack of trust in government assurances
• Fear of corporate domination
• Central role of MSP
• Mass mobilisation across states

Farmer leaders say the government risks repeating history by ignoring grassroots voices.

 

Impact on Rural Politics

The issue is already reshaping rural political narratives.

• Farmers are re-mobilizing
• State governments are under pressure
• Election strategies may shift
• Rural voter anger is rising

Analysts say agriculture-related unrest could have far-reaching political consequences.

 

Global Trade vs Domestic Reality

At the heart of the controversy lies a fundamental tension:

Can global trade ambitions coexist with small-scale farming realities?

India’s farm sector is not just an economic unit—it is a social safety net, cultural backbone, and political force.

 

What Farmers Are Demanding

Farmer outfits have laid out clear demands:

1. Full disclosure of the trade deal
2. Parliamentary debate
3. Legal guarantee of MSP
4. Protection for dairy and staple crops
5. Withdrawal from harmful trade commitments
6. Resignation of Piyush Goyal

Until these demands are addressed, unions say protests will continue.

 

FAQs

Why are farmers opposing the India–US trade deal?

Farmers fear cheap US imports, loss of MSP protection, harm to dairy and small farmers, and increased corporate control over agriculture.

What does ‘total surrender’ mean in this context?

Farmer outfits believe India has conceded too much to US demands, risking domestic agriculture without adequate safeguards.

Is MSP really under threat?

The government denies it, but farmers worry trade rules could indirectly weaken MSP over time.

Why is Piyush Goyal being asked to resign?

As the lead negotiator, he is accused of ignoring farmer concerns and prioritizing corporate interests.

Will protests intensify?

Yes. Farmer unions have announced nationwide protests and warned of escalation if demands are ignored.

Has the government agreed to open dairy markets fully?

Official details remain unclear, which is precisely what worries farmers and dairy cooperatives.

 

Conclusion: A Deal at the Crossroads of Trust and Turmoil

The uproar over the India–US trade deal is not just about tariffs or imports—it is about trust.

For millions of farmers, agriculture is survival, not strategy. Any agreement perceived as threatening that survival is bound to provoke resistance. By calling the deal a “total surrender”, farmer outfits have signaled that they see this moment as existential.

Whether the government can bridge the trust deficit, clarify safeguards, and prevent another prolonged rural standoff remains to be seen. What is clear, however, is that India’s farmers are once again ready to take to the streets, and they are not backing down easily.

The coming weeks may determine whether this trade deal becomes a symbol of global ambition—or another chapter in India’s long struggle between policy and the plough.

Piyush Goyal resignation demand, Indian farmers reaction