India US trade deal, stock market: What Nomura says as Asian peers hit by tariffs

India-US trade deal: Nomura on Wednesday said it expects India to strike a favourable trade deal soon, even as negotiations continue for Thailand, Malaysia and Indonesia. 

The Trump administration recently sent letters to 14 trading partners announcing new tariff rates. Amongst the major ones that were included were Japan and Korea – which have been actively negotiating with the US, but appear to have failed to secure a trade deal ahead of the 9 July deadline, Nomura noted.

“This is not a major negative surprise, as there were some indications earlier that both might miss the US deadline. In the rest of Asia, larger trading partners that were included were Thailand, Malaysia and Indonesia, while smaller ones such as Laos, Myanmar, Cambodia and Bangladesh were also included,” Nomura said.

It noted that India, the EU and Taiwan were not part of this package, and it is possible that for some either a trade deal (e.g., with India) or new tariff rates may be announced soon.

Nomura said the new tariff rates are largely similar to those on Liberation Day, and the August 1 deadline allows Asian policymakers to negotiate a better deal. “The 1 August deadline also gives some time for Asian policymakers to negotiate a better deal from here. We expect India to strike a favourable trade deal soon, while negotiations continue for Thailand, Malaysia and Indonesia,” Nomura said.

Business Today on Tuesday  quoting a senior government official reported that India and the United States have successfully negotiated a limited trade deal. The agreement was reached after several weeks of intense negotiations, during which India is believed to have stood its ground on key demands.

“We were prepared to absorb the impact of tariffs had the U.S. remained inflexible,” the official said. “But Washington showed willingness to engage, and that allowed the deal to move forward.”

Earlier, Trump said the US was close to reaching a trade deal with India. 

As far as the domestic stock market is concerned, Ajit Mishra – SVP, Research, at Religare Broking said the recent stability, despite lingering caution ahead of the trade deal announcement and the upcoming earnings season, suggests that the bulls remain in control and anticipate a resumption of the uptrend. 

“However, participants should avoid complacency and maintain their focus on stock selection, as sectoral participation continues on a rotational basis,” he said.