Nifty stumbled as US-India trade deal talks may stall

·       India is not ready to open up the politically sensitive farm sector for US products, despite Trump’s tall claim; for India, it’s a non-negotiable red line

·       The farm and MSME sectors are big vote banks for both India and the US; thus, both the Modi and Trump administrations are not ready to compromise for respective domestic political compulsion

·       US-India may sign a tentative mini-trade deal by July 8, and Trump may extend the tariff pause deadline to December’25

·       At around 25800 and TTM (FY25) EPS 916, the TTM Nifty PE is around 28, almost at the bubble zone; average trend CAGR of Nifty EPS is ~ 10%

India’s benchmark stock index, Nifty, closed around 25510 on Monday, June 30, 2025, eased 0.51% after a 4-day rally.  Nifty made an opening high of 25662 amid positive global/US cues over the weekend, but stumbled soon on normal profit booking after a 3.50% rally for June’25 and almost a 15% surge in the last 4 months (March-June 25). There were also some reports suggesting ongoing US-India trade deal talks may stall on India’s reluctance to fully open up its farm sector for ‘highly subsidized’ US exports/products.

Farmers are a big vote bank for both India and the US:

Almost 50% of the Indian population, especially in rural and semi-urban areas, is economically dependent on farming activities. India is not yet ready to open up for US exports, while the Trump admin is quite adamant to sell US farm products to a big country like India. In reality, the farmers/rural population is a big vote bank for any political party in any democracy anywhere in the world, and thus both India and the U.S. are trying to play to their respective domestic political compulsion. But unlike China, India has no significant leverage over the US. India needs to maintain good exports and other geopolitical relations with the US for USD, while the US may not need India for any such reason, except for some China issues.

Did Trump damage Modi’s strong political leadership image in India?

India, a trade deficit country, is eager to sign a trade deal with the US as the US trade surplus and net remittances, totaling almost $100B is the biggest source of its USD requirement, which it needs to pay bigger trading partner China, which has also almost $100B trade surplus with India. Trump’s proposed remittance tax of 5% (now reduced to 3.5% and 1.0% by the final Senate version of the BBB) is also a cause of concern for India.

Thus, despite Trump’s provocative & bullying comments, and ‘honeymooning’ with Pakistan (for rare earth materials), Indian PM Modi is largely silent, but also steadily increasing cooperation with China and the EU, while publicly urging for both MAGA & MIGA. Recent G7 fiasco and Modi’s reported refusal to accept Trump’s White House dinner invitation (in the presence of Pakistan’s Military Chief) may indicate relations between them are not so much friendly, especially after Trump’s narrative on India-Pakistan war ceasefire. Trump said India and Pakistan both agreed to a quick ceasefire because he threatened both with tariffs. This Trump narrative damages Modi’s political and nationalistic image back home in India; Modi is being seen as a ‘weak, spineless leader’.

The trade deal between India and the US primarily focuses on key sectors such as agriculture, automobiles, industrial goods, and labor-intensive products. Agriculture and dairy sectors are difficult and politically challenging areas for India to give duty concessions to the US. Almost 50% of the Indian population (vote bank) is dependent on this sector (mainly rural areas), and drastically opening up this sector may erode the vote bank for the ruling BJP party/Modi admin. India has not opened up dairy in any of its free trade pacts signed so far.

The US also wants duty concessions on certain industrial goods, automobiles - especially electric vehicles, wines, petrochemical products, dairy, and agricultural items like apples, tree nuts, and genetically modified (GM) crops. But India is raising various regulatory and religious issues for a free & fair access of US farm items in India, something which the Trump admin may not digest at all. India is seeking duty concessions for labor-intensive sectors like textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas in the proposed trade pact.

Current Status of the US-India Trade Deal:

The U.S. and India are actively negotiating a bilateral trade agreement aimed at reducing trade barriers and boosting bilateral trade, currently valued at $191 billion, to reach $500 billion by 2030. The talks, which began even before President Trump’s April 2, 2025, announcement of “Liberation Day” tariffs (up to 26% on Indian goods), are part of a broader effort to avoid or mitigate reciprocal tariffs set to take effect on July 9, 2025, after a 90-day pause.

India has proposed significant concessions, including reducing duties to 0–5% on 90% of US tariff lines, covering 19 out of 24 goods categories, such as frozen meat, fish, poultry, and certain fruits, though agriculture and military equipment remain contentious. The first phase of the deal focuses on digital trade, tariffs, market access, pharmaceuticals, electronics, and defense supply chains, with a more comprehensive agreement expected by fall 2025 (October).

However, negotiations have faced challenges. India is pushing for a rollback of the proposed 26% reciprocal tariff and existing US tariffs on steel, aluminum, and auto parts, but US negotiators have not yet agreed. India has also filed a WTO complaint, accusing the US of “arbitrary and discriminatory” tariffs on its pharmaceutical, metals, and auto exports, signaling a shift to a more assertive stance. Indian officials emphasize that any deal must be mutually beneficial, with Foreign Minister Jaishankar stating, “Nothing is decided till everything is,” and Commerce Minister Piyush Goyal leading efforts to secure a “fair, equitable, and balanced agreement.”

Recent Comments by Trump and His Officials:

Trump: On June 26, 2025, at a White House event, Trump hinted at a “very big” trade deal with India, stating, “We have one coming up, maybe with India--Very big one-- Where we’re going to open up India.” He suggested that the deal would remove trade barriers, claiming it was previously “unthinkable” to access the Indian market freely. Earlier, on May 15, 2025, Trump claimed India offered “literally no tariffs” on US goods, a statement swiftly disputed by Jaishankar. Trump also linked trade leverage to a claimed India-Pakistan ceasefire, a narrative India has rejected.

In a White House speech on June 26, 2025, President Donald Trump announced that the United States had signed a trade deal with China on June 25. He mentioned U.S. Trade Representative Jamison Greer, noting that Greer was "very busy" and that "everybody wants to make a deal and be a part of it." Trump provided no specific details about the China deal but hinted at a potential trade agreement with India, stating, "We are preparing a similar one with India — a very large one. We are going to open the Indian market for our products."  

Trump also emphasized a selective approach to trade deals, saying, "We're not going to make deals with everybody. Some we're just going to send them a letter and say thank you very much, you're going to pay 25%, 35%, 45% tariffs." These comments were made during an event promoting a government spending bill (BBB) on June 26. Trump described the potential India trade deal as “very big,” claiming it would “open up India” by removing trade barriers, something which Indian officials are not comfortable acknowledging officially.

In a June 27/30 Fox News interview, Trump reiterated confidence in finalizing the deal and also indicated flexibility, saying, “I don’t think I’ll need to,” though he added, “I could, no big deal.” His earlier May 15 claim that India offered “literally no tariffs” was refuted by Foreign Minister S. Jaishankar, who emphasized, “Nothing is decided till everything is,” a sentiment echoed by Sitharaman’s call for a balanced deal.

Lutnick (Commerce Secretary): On June 3, 2025, Lutnick expressed optimism, stating, “You should expect a deal between the United States and India in the not-too-distant future because I think we have found a place that works for both countries.” He emphasized mutual benefits and progress toward concluding the first tranche of the agreement by fall. He acknowledged India’s protectionist policies as a challenge but highlighted progress in tariff negotiations.

On late June 26, soon after Trump concluded his White House event & speech, the US Commerce Secretary Howard Lutnick made some comments on potential trade deals. In a BBG interview, he clarified President Trump's June 26 White House remarks, stating that a trade deal with China was signed on June 25, codifying terms from earlier Geneva talks. This deal includes China delivering rare earths, with the U.S. reducing countermeasures in response. Lutnick also mentioned that the Trump administration aims to finalize trade deals with ten major trading partners by July 9, with negotiations for a U.S.-India trade deal nearing completion, described as at the “close finish line.”

Scott Bessent (Treasury Secretary): On April 29, 2025, Bessent indicated that India could be among the first to sign a trade deal with the US, possibly within days, highlighting India’s eagerness to offer concessions compared to other partners like China or the EU.

JD Vance (Vice President): On April 22, 2025, Vance announced that the US and India had “officially finalized the terms of reference for the trade negotiation,” describing it as a vital step toward realizing Trump and Prime Minister Modi’s vision of MAGA (Make America Great Again) and also MIGA (Make India Great Again).

Will India be able to sign the US preliminary trade deal by the July 9 deadline?

In summary, India’s proactive approach includes offering a “future-proof” deal ensuring the US receives better terms than other partners (e.g., the UK or EU) and increasing US oil and defense imports to narrow the $45 billion merchandise US trade deficit. However, domestic political sensitivities, particularly in agriculture, and Trump’s unpredictable tariff policies and random bellicose comments often complicate negotiations. India’s WTO filing and diversification of trade ties (e.g., recent UK and EU agreements) reflect a strategy to maintain leverage. Trump’s broader trade agenda, including a recent China deal and back & forth talks with Canada and, EU, underscores his use of tariffs as a negotiation tool, though his claims often outpace finalized agreements.

While both the US and India are optimistic about finalizing a trade deal, with significant progress reported, sticking points remain over tariffs and sensitive sectors. Trump’s rhetoric suggests imminent breakthroughs, but India’s cautious stance and WTO approach indicate a complex path forward. The July 9 deadline looms as a critical juncture, though Trump has noted flexibility to extend it.

There are reports that a trade deal between India and the US is likely to be announced before July 8, 2025, just before the expiration of President Trump’s 90-day suspension of “Liberation Day” tariffs set to impose up to 36% tariffs (26%+10%) on Indian goods starting July 9. The announcement follows Trump’s remarks at a White House event on June 26, where he hinted at a “very big” trade deal with India, stating his administration aimed to “open up India” by removing trade barriers, which he described as “unthinkable.” The deal is part of negotiations that began in February 2025 during Prime Minister Modi’s White House visit, intending to boost bilateral trade from $191 billion in 2024 to $500 billion by 2030.

The agreement focuses on key sectors including agriculture, automobiles (especially electric vehicles-EV), industrial goods, and labor-intensive products like textiles and gems. However, agriculture and dairy remain significant sticking points, with India historically resistant to opening its dairy market in free trade agreements due to political, cultural, and economic sensitivities, particularly around cow milk and genetically modified (GM) crops. The U.S. is seeking duty concessions on items like wines, petrochemicals, apples, tree nuts, and electric vehicles, while India is pushing for favorable terms in textiles, leather goods, and pharmaceuticals (lower tariffs or duty-free with limited quota).

India's trade negotiator team may extend its stay in the US till July 8:

Despite progress, challenges persist. India’s Finance Minister emphasized that agriculture and dairy are “big red lines” in the talks, and Indian negotiators, led by Commerce Minister Piyush Goyal, are seeking a full exemption from the 26% reciprocal tariffs and existing U.S. duties on Indian steel and aluminum. A team of Indian negotiators was in the U.S. for final talks before the July 8/9 deadline, but uncertainty about meeting this timeline, with some indicating the deal might not be finalized by July 8, potentially leading to renewed tariff pressures.

Trump’s broader trade strategy, including a recently secretly signed deal with China, and his flexibility to extend the July 9 deadline, add complexity. India’s concurrent trade agreements with the UK and EU reflect its strategy to diversify partnerships amid U.S. tariff threats. While both sides are optimistic, the deal’s finalization hinges on resolving contentious issues like agriculture and tariff exemptions.

India’s firm stance in trade negotiations with the United States, emphasizing that agriculture and dairy are “big red lines” for India, as stated by Finance Minister Nirmala Sitharaman in an interview. With President Trump’s July 9, 2025, deadline looming for imposing reciprocal tariffs of up to 26% on Indian goods, India is exercising caution in opening its agricultural and dairy markets due to their political and economic sensitivity. Sitharaman noted, “Agriculture and dairy have been among the very big red lines, where a high degree of caution has been exercised,” but expressed optimism for ‘a big, good, beautiful’ trade deal that would benefit India if concluded early.

The U.S. is pushing for greater market access for its agricultural goods, ethanol, dairy, alcoholic beverages, automobiles, pharmaceuticals, and medical devices, citing a significant trade imbalance. India’s resistance stems from concerns about the impact of subsidized U.S. farm products on its millions of farmers, with domestic auto, pharmaceutical, and small-scale firms also lobbying for a gradual opening of protected sectors to avoid competition from U.S. firms. Sitharaman emphasized that discussions on the trade deal would involve “deep consultations” to address these concerns.

India’s trade talks with the US may have stalled in the last minute:

India’s firm stance on agriculture and dairy as non-negotiable, Sitharaman’s “red lines” comments, and extension of Indian officials' stay may be indicating trade talks have faltered due to disagreements over tariffs on farm goods, autos, and steel, suggesting the July 9 deadline may be missed. India’s exports to the U.S. have surged (up 28% to $37.7 billion from January to April 2025), driven by front-loading to avoid tariffs, but exporters are delaying shipments due to uncertainty. India’s offer of a “forward-most-favoured-nation” clause to ensure the U.S. gets better terms than other trade partners underscores its eagerness to secure a deal, but domestic political compulsion and Trump’s erratic comments complicate progress.

The market was expecting an early announcement of the US-India trade deal:

The much-awaited India-US interim trade deal could be announced by July 8, as sources say all terms have been agreed upon by both sides. An Indian team, led by chief negotiator and Special Secretary in the Department of Commerce Rajesh Agrawal, has been in Washington to finalize the talks. Both sides are working towards a multi-sectoral, comprehensive first tranche of a Bilateral Trade Agreement (BTA) by October this year.

Agriculture and Dairy as Non-Negotiable:

India’s Finance Minister Nirmala Sitharaman emphasized that agriculture and dairy are “two very big red lines” in the U.S.-India trade talks, citing their political and economic sensitivity. With over 700 million people dependent on agriculture and India’s cultural concerns around dairy (particularly cow milk), opening these sectors to U.S. imports, especially genetically modified (GM) crops and dairy products, is highly contentious. Sitharaman stated, “Agriculture and dairy have been among the very big red lines, where a high degree of caution has been exercised by India,” but expressed optimism for a “big, good, beautiful” deal that benefits both nations if concluded early.

Negotiation Progress and Concessions:

India has offered tariff reductions of 0–5% on 90% of U.S. tariff lines, covering 19 of 24 goods categories, including frozen meat, fish, poultry, almonds, pistachios, cranberries, and select fruits. The U.S. is pushing for greater market access for its dairy, ethanol, apples, tree nuts, alcoholic beverages, automobiles, pharmaceuticals, and medical devices to address the $45.7 billion U.S. merchandise trade deficit with India. However, India seeks a full exemption from the proposed 26% reciprocal tariff and existing U.S. duties (50%) on steel and aluminum, which the U.S. has not yet agreed to. India’s offer includes a “most-favoured-nation” (MFN) clause, ensuring the U.S. receives better terms than other trade partners like the UK or EU.

Political Challenges and Domestic Pressures from farmers and MSMEs:

There are domestic resistances, with the Apple Farmers’ Federation of India (AFFI) warning that U.S. apple imports (projected at 6 lakh metric tonnes in 2025) could harm local growers. Indian auto, pharmaceutical, and MSME sectors are also lobbying for a phased opening to avoid competition from U.S. firms. Sitharaman noted that negotiations require “deep consultations” to balance domestic interests, especially given the risk of subsidized U.S. farm products flooding India’s market. India’s recent WTO complaint against U.S. tariffs on its steel and pharmaceutical exports reflects its tougher stance, with retaliatory tariffs on U.S. goods under consideration.

Overall, Indian Finance Minister Sitharaman’s cautious tone and the extended trade talks suggest challenges in meeting Trump's deadline of July8/9. India’s concessions (e.g., tariff reductions on specific U.S. goods) and domestic political pressures & AFFI’s concerns, and offer to ease export regulations on U.S. high-value goods like aircraft and whiskey are complicating the overall situation. The WTO filing and India’s diversification of trade ties with the UK and EU, as noted in prior sources, are consistent with the article’s portrayal of India’s strategic balancing act.

India is trying for a face-saving mini trade deal with the US, with the hope for another extension of the tariff pause by Trump. With the July 9 deadline looming, Indian negotiators, led by Commerce Minister Piyush Goyal, extended their stay in Washington past June 27 to finalize an interim deal. Sitharaman suggested that a “mini deal” covering less contentious sectors like energy, autos, and defense could be feasible before the deadline, but a comprehensive agreement, including services and intellectual property, is likely deferred to October 2025. Failure to reach a deal could see the 26% tariff applied to $12 billion of Indian exports (e.g., textiles, pharmaceuticals, auto components), potentially eroding margins by 8–12%. Various reports reflect uncertainty about the July 8 announcement timeline. Talks may have stalled over agriculture, autos, and steel, while there are questions whether the deal will materialize or hit a “dead-end.”

Various reports underscore agriculture and dairy as critical barriers to a U.S.-India trade deal, with Finance Minister Nirmala Sitharaman emphasizing India’s cautious approach to protect its farmers and cultural sensitivities. While India has offered significant concessions, including tariff reductions on 90% of U.S. goods, disagreements over agriculture, dairy, and tariff exemptions persist. The July 9 deadline adds urgency, with a mini deal possible but a comprehensive agreement likely delayed to October 2025.

Economic Impact: India’s exports to the U.S. surged 28% to $37.7 billion from January to April 2025 due to front-loading to avoid (front load) tariffs. Exporters are now delaying shipments due to uncertainty, with potential tariff impacts on $12 billion in exports.

Global Trade Dynamics: The U.S.-China trade truce (reducing tariffs from 145% to 30% for the U.S. and 125% to 10% for China) increases competitive pressure on Indian exports. India’s reliance on Chinese components for electronics and pharmaceuticals complicates its position, as does its recent trade deals with the UK and EU, which provide leverage but highlight its strategic diversification amid U.S. tariff threats.

Conclusions: US-India mini trade deal or tariffs after July 9:

Trump’s optimistic rhetoric and his officials’ confidence contrast with India’s firm stance and domestic pressures, as well as skepticism about meeting the deadline. India’s WTO action and diversified trade ties reflect its strategic maneuvering, but the deal’s outcome remains uncertain as negotiations reach a critical juncture. India lacks the rare earth-like leverage that China wields, limiting its bargaining power in U.S. trade talks, and its reliance on USD for trade and debt servicing heightens the stakes of the July 9, 2025, tariff deadline.

While the U.S. holds stronger leverage due to its economic dominance and tariff threats, it needs India’s market, supply chain alternatives, and geopolitical alignment to counter China. India’s concessions (e.g., tariff reductions on 90% of U.S. goods) and strategic moves (WTO complaint, UK/EU deals) aim to balance its vulnerabilities, but agriculture and dairy remain non-negotiable “red lines”. The negotiations, extended past June 27, aim for a mini-deal by July 9, but a delay to October is likely for a meaningful trade deal. Trump’s confidence contrasts with India’s cautious stance, and the outcome will significantly impact India’s USD inflows and market stability.

On June 30, the White House Press Secretary. Leavitt said:

·       Finalizing agreements, we will hear about the trade deal with India very soon

·       President Trump is now finalizing trade deal terms with his trade team in the WH

·       India is an important strategic partner for the US in South East Asia, and the relationship between President Trump and Prime Minister Modi is good and will continue to be good.

Nifty gained 3.10% for June’25 on positive global cues amid an easing of Trump’s Iran, Trade, and Fed war tensions, coupled with optimism over Trump’s ‘Big & Beautiful Bill” (BBB), a package of tax cuts and spending adjustments. Trump will hike spending for military and border security, while cutting Medicaid and food stamps, and other social security programmes.

Although Trump’s tariffs and spending cuts on Medicaid, food stamps, and various other social security programmes, which are bound to affect the average US public negatively, Trump’s tax cuts may also benefit them to some extent. Apart from supportive global cues, Nifty was also boosted by the RBI’s bigger-than-expected rate cuts on June 6, 2025.

Overall, India’s Nifty was boosted in June’25 for:

·       Bigger than expected RBI rate cuts on June 6, 2025

·       Hopes of potential another 50 bps rate cuts by FY26 (October’25 and February’26 @25 bps each)

·       India’s favorable macros like falling inflation, robust economic growth, and stable currency

·       Easing of Iran war tensions and fall of Brent crude oil prices from $79 to almost $65; India imports almost 85-90% of its oil requirement, and thus a higher oil price for longer would be negative for the economy.

·       Easing of Trump trade war tensions after Trump unofficially announced China, and a potential trade deal

·       Easing of Trump’s Fed war tensions; earlier, Trump’s comments and a report about the shadow Fed Chair caused panic in the market

On June 30, 2025, the Nifty 50 index experienced a slight downturn, closing the day with a decline of approximately 0.47% after a robust four-day rally. This pullback was attributed to profit booking in the final trading session of the month, as investors locked in gains following a strong upward trend. Despite the daily decline, the Nifty 50 gained an impressive 766.35 points, or 3.1%, throughout June, reflecting sustained bullish momentum driven by strong domestic and foreign institutional inflows. Key sectors such as banking, metals, and oil & gas contributed significantly to the month's gains, though selective profit-taking in IT and consumer goods capped the upside on the last day.

Overall Nifty Movement since March 2025:

Since March 2025, the Nifty 50 has shown a remarkable recovery, turning positive for the year after a challenging period of five consecutive months of negative returns from October 2024 to February 2025. The index bottomed out around March 4, 2025, at 21,964, but staged a strong rebound, gaining approximately 1,745 points by late March and continuing its upward trajectory. By June 30, 2025, the Nifty 50 was trading around 25,500–25,650, reflecting a year-to-date gain of about 5.9% and a significant 13% increase since its April 7 low. This recovery was underpinned by several key factors:

Macroeconomic Support:

The Reserve Bank of India (RBI) implemented proactive measures, including a cumulative 100 basis point repo rate cut since February 2025, with a notable 50 basis point reduction in June, bringing the rate to 5.5%. These cuts, alongside a planned & phased reduction in the cash reserve ratio (CRR), enhanced liquidity and supported rate-sensitive sectors like banking, auto, and realty. Improved government spending, with capital expenditure picking up in the latter half of FY25, further bolstered market sentiment.

Sectoral Performance:

The banking sector, particularly the Nifty Bank index, was a key driver, surging to record highs above 57,400 in June, fueled by strong performances from heavyweights like ICICI Bank, SBI, and HDFC Bank. The Nifty Financial Services index also rose by approximately 9% in March and continued to perform well, supported by robust credit growth and investor optimism. The auto sector benefited from festive demand and a gradual shift toward electric vehicles (EVs), while realty stocks gained 5.6% in June due to favorable borrowing conditions. However, the IT sector lagged, with only marginal gains due to global demand slowdowns and profit booking. India’s IT/techs generally follow Nasdaq-100 movement and slip on June 30, following a similar move for NQ-100 future amid higher bond yields and increasing Trump tech war tensions, especially with China and Canada, the EU’s digital tax on US tech MNCs.

Institutional Inflows:

Domestic institutional investors (DIIs) provided consistent support, with net buying of over ₹68,000 crore in June alone. Foreign institutional investors (FIIs) showed mixed activity, with net selling of ₹5,670 crore in June after being net buyers in March (₹2,014 crore), April (₹2,735 crore), and May (₹11,773 crore). Despite FII selling in June, positive global cues, such as easing geopolitical tensions and expectations of a U.S. Federal Reserve rate cut, supported market (risk) sentiment.

Challenges and Risks: The conflict of interest between MAGA & MIGA:

Despite the positive momentum, the Nifty faced challenges from global uncertainties, including U.S.-China trade tensions, potential tariff hikes, and geopolitical risks in the Middle East. Domestically, concerns over corporate earnings sustainability and high valuations in certain sectors, particularly large-caps, prompted selective profit booking. Even if some sort of mini US-India trade deal is announced by July 9 with an extension of Trump tariffs, the subsequent uncertainty between the US and India over trade & tariffs, potentially various other geopolitical issues, including Indian immigrants in the US, H1B visa restrictions, may hurt Indian interests.

India’s long-term growth story is intact despite the Trump tariff war uncertainty:

The market remains cautiously optimistic about the Nifty’s trajectory, with expectations of continued growth driven by domestic cyclical sectors like banking, NBFCs, and infrastructure. The RBI’s proactive monetary policy and improving macroeconomic indicators, such as a stabilizing rupee and rising forex reserves ($696.66 billion as of early June), provide a supportive backdrop. The Nifty 50’s performance on June 30, 2025, reflected a minor correction amid profit booking, but the broader trend since March 2025 highlights a strong recovery fueled by domestic resilience, policy support, and selective sectoral strength. While global uncertainties and valuation concerns warrant caution, the index’s 13% rally since early April underscores India’s growth potential, making it a compelling market for investors with a balanced approach for the long term despite Trump trade & tariff war uncertainties.

Fundamental valuation: Nifty now approaching bubble zone; now TTM PE is 28, near bubble zone:

In the stock market, valuation or earnings is the ultimate; every other news is noise. The stock market is a slave of earnings. For example, the present TTM Nifty EPS is around 916, and the projected EPS for FY26 may be around 1008 (assuming a 10% CAGR). At around 20-22 fair median PE (PEG: ~2), the projected fair value of Nifty is around 20000-22000 (base case scenario); at around 25-27 high PE (PEG ~2.5), the target of Nifty may be around 25000-27000 (best case scenario), while at 18-15 low PE (PEG: ~1.5), the bottom may be around 18000-15000 (worst case scenario like COVID 2.0 or WW-III like scenario). Nifty reported FY25 EPS at 916 vs 909 in FY24; almost flat against the longer-term run rate of 10-15%; this is due to heavyweight RIL’s bonus issue, which almost halved its EPS and also Nifty’s significantly.

As the stock market usually discounts at least 1Y earnings in advance, the potential range of Nifty for FY26/CY25 may be around 15000/18000 (worst case)-22000/20000 (base case-normal correction-fair value), and 25000-27000 (best case). Nifty recently made a swing low around 21700 in early April’25 amid the Trump trade war tantrum; before that, Nifty made a panic low around 21200 on Indian election counting day (June 5, 2024) amid a Modi 3.0 turmoil-like scenario in the exact poll contrary to the exit poll. Now, Nifty is hovering around 25000 (best-case scenario range).

Looking ahead, technically Nifty, if sustained above 5850-26050 zones, then may scale again to 26500 life time high in the coming days; otherwise, expect some correction. For this potential breakout of Nifty, we need some positive news support like a favorable trade deal with the US; otherwise, we may see some long unwinding and fresh selling by institutions, resulting in distribution and subsequent correction rather than consolidation/accumulation and further appreciation.

Technical outlook: Nifty Future and Bank Nifty Future

Looking ahead, whatever may be the narrative, technically Nifty Future (CMP: 25600) now has to sustain over 25900-26000 for a further rally to 26100/26300-26400/26500; otherwise, sustaining below 25850/25450, Nifty Future may fall to 25200/25000-24900/24700-24300/24000 and 23600/23350*-23900/23750 and 23400*/23100-22600/22200 and further 22000-21700* the coming days.

Technically, Bank Nifty (57500) now has to sustain over 58000 for a further rally to 58500/58900-60500/61000 and a further 61500-65750 in the coming days; otherwise, sustaining below 57800, BNF may again fall towards 57000/56500-56000/54900 and 54500/54000-53500/53000 and 52500*-52000/51500 and further 51000/50500-50000/49700 and 49200-47700 in the coming days.