'Markets need more clarity on US trade deal for rally to sustain'

Sensex rallied over 4,200 points in intraday trade on Tuesday, triggered by the India-US trade deal. Shankar Sharma, founder, GQuant Investech, tells Puneet Wadhwa in a telephonic interview that he does not see the Sensex and Nifty giving more than fixed-deposit returns in the next 12 months. Edited excerpts:

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The markets need more clarity on the contours of the deal to move up from here. We require more clarity and that is a nonnegotiable item as far as the market is concerned.

The details available till now are too superficial for any sensible or serious analyst to make a lot of sense of. And, as I've just explained the bare math, if this math is true, then it doesn't look good at all.

So, have the markets overreacted?

The market was looking for some reason to rally, and it has got some reason now in the form of India-US trade deal. Once analysts and investors settle down, they will ask more questions (about the deal). That said, the initial reaction (to the deal) was always going to be a little over the top. Deeper questions will emerge in a couple of days.

How important are corporate earnings growth for this momentum to sustain? Or are better times already baked in?

Yes, it is over to the earnings growth for the markets to sustain the up move. One needs to understand that the trade deal was not the reason for the markets to be bearish all this while. The trade deal was a complete red herring. The trade problem started only last year, especially in the second half of 2025. But the bear market started in 2024. So, how can we blame a reason (trade deal not happening) that occurs 12 months later for an event that happened 12 months before?