US-India trade deal boosts exporters' confidence, but largecap focus remains key: JPMorgan’s Sanjay Mookim

The India–US trade deal may have done more than resolve tariff uncertainty — it has reset market sentiment almost overnight, says JPMorgan’s Sanjay Mookim. After weeks of turbulence, including Sunday’s panic-driven sell-off triggered by the STT hike, the return of policy clarity has offered the first real relief to D-Street investors.

Speaking to ET Now, Mookim highlighted how quickly the market mood can swing. “Markets do react emotionally all the time to things, but I would argue that the resolution on the trade deal is a good outcome for the overall economy. And more so, look because our industry is now competitive with the 18% tariff. We are at or below peers in Asia or South Asia, and this should provide enough of a fillip to our manufacturing industries,” he said.

But while the tariff cut has improved sentiment, Mookim cautioned that it does not automatically translate into an earnings upgrade cycle. The economy, he stressed, was never under strain — only investor confidence was. “Exports were actually holding up better than we had feared… but at least there was this crisis of confidence,” he noted. The trade resolution helps correct that, but, as he put it, “It is not necessary that when the tariffs are resolved… we will get a major upgrade cycle. That needs to be far more organically driven.”


Meanwhile, currency dynamics are adding to export competitiveness. “The trade weighted REER has come off quite a bit, from 105 to 95… The rupee, you can argue very clearly, is undervalued,” he said. With both tariff clarity and a supportive currency, exporters have reason to feel optimistic. “If I were an exporter… I would be fairly excited right now.”

Even so, Mookim remains cautious about chasing smaller export-oriented stocks. Most large-cap exporters — particularly IT and pharma — were never affected by tariffs and therefore won’t see incremental gains from the new policy. “The largecap exporters were already out of the tariff… they do not have the net benefit from the overnight developments,” he said. With earnings breadth expected to narrow even as nominal GDP growth stays near 9–10%, he remains firm: “I would still argue that a largecap strategy will make better sense than a smallcap.”

The bottom line: trade clarity has steadied nerves and strengthened the export outlook, but the market’s next leg will depend on earnings, discipline, and sticking with large-caps over quick sentiment trades.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)