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Venugopal Garre, Managing Director and India Head of Research at Bernstein, retained the neutral stance on Indian equities. He sees the India-US trade deal as a sentiment positive, but believes the Union Budget is unlikely to change the near-term growth path. .
Bernstein has retained its Nifty target at 28,100 for the calendar year whlie maintaining its neutral stance, even as the India-US trade deal improves overall outlook. Managing Director and India Head of Research Venugopal Garre explained, “The market did fall in January, right? So that increased my return expectations without changing the target from seven to half percent to something like 11-12%.”
Garre sees the India-US trade deal as more relevant for markets than the India-EU pact because of the sharp tariff cuts. The drop in average duties makes India more competitive versus ASEAN peers and reduces the risk of being treated punitively in global trade.
Over time, closer alignment with a large consumer market like the US also helps India strengthen its position as an alternative to China in global supply chains.
“EU has a lot of FTAs and treaties and other things with different other countries. What it means is that you're literally competing with China or Vietnam or Bangladesh or any other country. In that sense incrementally didn't really seem like a game changer, or I would probably not call it as a mother of all deals by any measure,” he said.
Garre expects the US to push exports into India across a few key segments, led by energy, with crude oil and related products forming a major focus area. He also sees agriculture as a priority for the US, although India is likely to allow only selective access.
Electronics and technology imports could increase further as supply chains deepen between the two countries. Defence is another important but sensitive area, particularly given India’s existing reliance on Russian defence equipment.
In contrast, Garre is less concerned about autos and auto components, as pricing constraints and the lack of strong distribution networks are likely to limit the impact of lower duties in that segment.
On the Union Budget, Garre described it as disciplined and long-term in nature. Fiscal targets were maintained, capital expenditure stayed on track, and defence spending broadly matched expectations. While there were announcements around new-age areas like data centres and semiconductors, he does not expect these to materially boost growth in the next one to two years.
Overall, he sees the Budget as neutral for the economy in the near term, with no major upside surprise for markets.
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