After two trade agreements lifted a lingering cloud over Indian equities, investors are refocusing on the market’s stubbornly weak earnings outlook. The agreements, worth billions, eased concerns about tariff hikes and supply chain disruptions, but corporate profits still lag behind growth expectations.

Market analysts note that the trade deals, signed in late 2023, cut import duties on key electronics and automotive parts, boosting manufacturing margins. Yet, earnings forecasts for the next fiscal year remain below 5% growth, prompting caution among portfolio managers.

With the tariff uncertainty removed, the next focus shifts to corporate governance reforms and tax incentives that could lift profitability. Investors will watch quarterly reports for signs of cost containment and higher margins, which could justify a rebound in valuation multiples.

Analysts predict that if earnings improve, the NIFTY 50 could climb 3-4% in the coming quarter, but regulatory scrutiny over foreign investment limits remains a risk. Market watchers should monitor the Reserve Bank of India's policy stance for clues on future liquidity.