Trade Deal Sparks Rally
On Tuesday, February 3, 2026, Indian financial markets experienced a dramatic upward surge, with major stock indices climbing significantly. This powerful
movement was directly precipitated by the public announcement of a crucial trade agreement between India and the United States. The core of this positive development lay in the U.S. government's decision to reduce reciprocal tariffs on goods imported from India. Specifically, tariffs were brought down to 18 percent, marking a substantial decrease from the previously imposed 50 percent and a reversal of punitive measures that had been escalated during periods of geopolitical friction. This agreement effectively removed a substantial cloud of uncertainty that had been weighing on the markets, leading to enhanced clarity regarding the earnings potential for Indian exporters. Furthermore, the reduction in trade-related ambiguities and the strengthening of bilateral trade relations were seen as strong catalysts for attracting renewed foreign capital into India's financial assets, signaling a significant boost in investor confidence.
Market Indices Soar
The immediate aftermath of the trade deal announcement saw a broad-based and enthusiastic market reaction across various segments. The benchmark BSE Sensex registered an impressive gain, climbing as much as 2,288.84 points and approaching the significant milestone of 83,948 during midday trading. Concurrently, the Nifty 50 experienced a robust increase, gaining nearly 2.8 percent and moving tantalizingly close to its all-time high levels. This widespread optimism extended to the currency markets, with the Indian rupee showing considerable strength, appreciating by over 1 percent to trade around Rs 90.4 against the U.S. dollar. In the bond market, the yield on 10-year government bonds experienced a notable decline, reflecting a perceptible easing of risk perceptions among investors. This confluence of positive movements across equities, currency, and debt markets underscored the profound impact of the trade agreement on the overall economic sentiment and investor outlook.
Export Sectors Shine
The benefits of the U.S.-India trade agreement were particularly pronounced in export-oriented industries, which witnessed significant buying interest. Sectors such as textiles, gems and jewellery, auto ancillaries, and engineering goods were direct beneficiaries of the tariff reductions, as these measures directly enhance their competitive edge in the lucrative U.S. market. Experts in the financial domain lauded the deal as a pivotal catalyst, effectively dismantling a long-standing policy hurdle. By easing trade barriers, the agreement not only amplified the export potential for Indian businesses but also markedly improved overall market sentiment. This enhanced sentiment is expected to encourage both domestic and international investors to increase their allocations to Indian equities, fostering a more dynamic and robust investment environment. The strategic alignment of reduced tariffs with key Indian export strengths created a powerful positive feedback loop, driving growth and confidence in these vital economic sectors.
