Indian Stock market opened sharply higher on Tuesday, rallying close to 3 per cent as investor sentiment was buoyed by the announcement of the long-awaited India-US trade deal. Heavy buying was seen across sectors, lifting both frontline and broader market indices.
As of 9.25 am, the Sensex soared 2,421 points, or 2.97 per cent, to 84,088, while the Nifty climbed 741 points, or 2.96 per cent, to 25,829.
India and the United States have agreed to a trade agreement under which reciprocal tariffs on Indian goods will be reduced to 18 per cent from 25 per cent. In addition, the extra 25 per cent duty on purchases of Russian crude oil will be removed.
The trade deal will be “effective immediately,” President Donald Trump said after a phone call with Prime Minister Narendra Modi late on Monday, providing instant tariff relief for India.
Broad-Based Buying Lifts Midcaps And Smallcaps
The rally was not limited to frontline indices. Broader markets also posted strong gains, with the Nifty Midcap 100 rising 3.10 per cent and the Nifty Smallcap 100 advancing 3.25 per cent.
All sectoral indices traded firmly in the green. Realty, auto, consumer durables, and IT emerged as the top performers, gaining 4.47 per cent, 3.78 per cent, 3.69 per cent and 3.04 per cent, respectively.
With tariffs at 18 per cent, India’s rate is now lower than several major export-oriented Asian economies. Bangladesh, Sri Lanka, Taiwan and Vietnam face tariffs of 20 per cent, while Indonesia, Malaysia, Thailand, the Philippines and Pakistan face tariffs of 19 per cent.
Immediate support for the Nifty is seen in the 25,600–25,800 zone, while resistance is placed at 26,200–26,350, according to market watchers.
Growth, Earnings And Inflows Outlook Improves
“The dramatic announcement of the long-awaited US-India trade deal and the US decision to cut tariffs on India from 50 per cent to 18 per cent is a game changer for the Indian economy and stock markets as its delay was the single most important factor weighing on the markets,” an analyst said.
Market participants expect India’s growth rate to rise to around 7.5 per cent in FY27, supported by higher exports to the US. Corporate earnings, already showing signs of revival, could accelerate to 16–18 per cent in FY27.
Analysts also see the rupee rebounding sharply, noting that the combined impact of the US-India trade deal, the EU-India trade deal and a growth-oriented Budget could boost sentiment and trigger foreign capital inflows. Large-cap stocks in banking, non-banking financials, telecom, capital goods and IT—favoured by FIIs—could see strong inflows.
In Asian markets, Japan’s Nikkei surged 3.23 per cent and South Korea’s Kospi jumped 5.04 per cent, while China’s Shanghai index rose 0.38 per cent and Shenzhen gained 0.93 per cent. Hong Kong’s Hang Seng Index edged up 0.11 per cent.
US markets ended mostly higher in the previous session, with the Nasdaq up 0.56 per cent, the S&P 500 gaining 0.54 per cent and the Dow rising 1.05 per cent. On February 2, foreign institutional investors net sold equities worth Rs 1,832 crore, while domestic institutional investors were net buyers worth Rs 2,446 crore.
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