THE 18% EDGE: SET FOR BULL RUN 2.0?

Fiscal discipline and trade breakthroughs have now created prime entry points for equity investors

- Abhishek Mukherjee

The biggest sentiment booster for Dalal Street has been the announcement of the India-US trade deal.

Life is a storm, my young friend. You will bask in the sunlight one moment, be shattered on the rocks the next. What makes you a man is what you do when that storm comes.

—Alexandre Dumas, The Count of Monte Cristo

Sunny days, fresh winds and quiet signs of life mark the onset of spring. Dalal Street was witnessing such a weather last week, until a storm barrelling across the global IT sector darkened the horizons again.

However, those who have weathered many such storms attest that the weather, like the market, has the tendency to return to normalcy. Storms, no matter how severe, should not be mistaken for the climate itself.

A growth-oriented, fiscally prudent budget and the announcement of the long-awaited India-US trade deal have significantly improved the macro backdrop for Indian markets, according to a host of market experts Mint spoke with. These strengthen the case for a medium-term recovery in investor confidence, particularly after a period marked by global risk aversion, foreign outflows and uneven earnings delivery.

That said, experts also add that the path ahead is unlikely to be linear and investors have to adopt a selective approach rather than a blanket risk-on stance, starting with a clear assessment of which segments stand to gain the most from the improving fundamentals.

The union budget for 2026-27 has hit the right notes on public investment-led growth while resisting the urge to sacrifice fiscal consolidation at the altar of populist policymaking. The fiscal deficit target for FY27 has been pegged at 4.3% of gross domestic product (GDP), slightly lower than last year’s 4.4%, even as it leans on capital expenditure to support growth.