Trade Deal Hopes vs. Earnings: BofA's Arbind Maheswari on Market Drivers

• Arbind Maheswari of BofA Securities believes India-US trade deal progress can boost market sentiment, but long-term gains hinge on economic growth and corporate earnings.
• He sees recent US ambassador comments on trade talks as positive, viewing a potential deal as a "big sentiment boost."
• BofA forecasts a 14% corporate earnings growth this year, potentially driving a 12% Nifty return, primarily from profits rather than higher valuations.
• Maheswari notes that foreign investors currently favor AI and semiconductor-heavy markets like Korea, Taiwan, and Japan, where India has limited listed exposure.
• He anticipates foreign selling pressure to ease, with potential US rate cuts and a weaker dollar leading to improved emerging market flows and small inflows into India later this year.

Why It Matters: While trade deal hopes offer a sentiment boost, sustainable market returns depend on strong corporate earnings growth.