Indian benchmark indices staged a powerful rally, with the Nifty and Sensex surging up to 4.7% and 4.4%, respectively, marking one of their strongest single-day advances. The sharp upswing followed the announcement
of a long-awaited India–US trade agreement, which helped ease tariff-related worries that had weighed on domestic equities for months.
In early trade, the BSE Sensex jumped nearly 3,500 points, or 4.4%, to touch 85,323, while the Nifty 50 advanced about 1,200 points, or 4.7%, to 26,308. The broader market echoed the upbeat sentiment, with mid- and small-cap indices also gaining around 3.4% each on Tuesday.
The surge put more than Rs 13 lakh crore into investors’ wealth within the first 15 minutes of trade, lifting the total market capitalisation of BSE-listed firms to around Rs 468.32 lakh crore.
Highlighting the reasons that are fueling the Indian stock market today, Santosh Meena, Head of Research at Swastika Investmart, said, “The Indian stock market today is in a bull trend due to the announcement of the India-US trade deal. The much-awaited trade deal has the potential to significantly improve sentiment across markets and among FIIs. After a strong gap-up opening during the Opening Bell, the possibility of the Nifty 50 index hitting fresh all-time highs in the near term cannot be ruled out. The Indian rupee is also expected to strengthen meaningfully.”
On segments that may benefit in upcoming sessions after the India-US trade deal, Santosh Meena of Swastika Investmart, said, “Export-oriented sectors are likely to be the key beneficiaries—textiles and apparel, gems & jewellery, leather, marine/seafood (shrimp), auto ancillaries, engineering goods, speciality chemicals, and select electronics and consumer goods. Pharma and IT/services may also witness an indirect sentiment boost.”
What’s driving the rally
India–US trade deal
After prolonged negotiations, India and the US sealed a trade agreement under which Washington cut reciprocal tariffs on Indian goods to 18% from 50%. In return, India will reduce tariffs and non-tariff barriers on American products. The breakthrough removes a major uncertainty that had kept foreign investors cautious and contributed to Indian equities’ underperformance. Through January, the Nifty had slumped over 1,000 points at its worst, even as foreign portfolio investors sold heavily.
Rupee strength adds comfort
A stronger rupee also supported sentiment, easing some pressure from global volatility. The currency opened at 90.40 against the dollar versus its previous close. Analysts believe the combined effect of the India–US deal, progress on the EU trade front and a growth-focused Budget could lift sentiment and revive risk appetite across markets.
FII short covering
Short covering by foreign institutional investors amplified the rebound. With bearish positions estimated to be close to 90%, traders rushed to unwind shorts as indices rebounded from oversold levels and the Nifty reclaimed the 26,000 mark. Anand James, Chief Market Strategist at Geojit Investments, said a sustained move above 25,000 opens the door to 25,800 and possibly 26,200, though failure to hold above 25,800 could trigger consolidation toward the 25,430–25,340 zone.
Heavyweights power gains
Large-cap stocks led from the front. Reliance Industries climbed nearly 4%, while Adani Ports surged about 8%, giving strong momentum to the benchmarks. HDFC Bank, L&T, Bajaj Finance, ICICI Bank, Infosys and Eternal gained up to 5%. Optimism around the Union Budget 2026’s capital expenditure push further strengthened expectations of better order flows.
Buzz for strong quarterly numbers
On how the India-US trade deal may benefit the Indian stock market in the medium to long term, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, “The India-US deal is expected to benefit export-oriented companies, especially the auto, IT, textile, pharma, gems and jewellery. So, companies from these segments are expected to report strong quarterly numbers in the upcoming quarters.” She said that the market would try to discount that buzz much before the companies start reporting such robust quarterly numbers.
Supportive global cues
Global markets also offered tailwinds. The Dow Jones rose roughly 515 points (1.05%), the S&P 500 gained 0.5%, and the Nasdaq advanced about 0.6%. Asian equities rallied, with Japan’s Nikkei jumping around 3% and South Korea’s Kospi soaring over 5%. Hong Kong’s Hang Seng and China’s CSI 300 posted modest gains, while Australia’s S&P/ASX 200 climbed 1.3% after the Reserve Bank of Australia raised its policy rate by 25 basis points to 3.85%, its first hike since November 2023.
Stocks to buy after India-US trade deal
On stocks to buy in the wake of the India-US trade deal and the reduction of Trump’s tariffs on India, Anuj Gupta, a SEBI-registered market expert, recommended 21 stocks to buy today from the auto, IT, pharma, textile, and defence sectors.
Pharma: Aurobindo Pharma, Cipla, and Glenmark Pharmaceuticals.
Defence: BEL, HAL, and Cochin Shipyard.
IT: TechM, HCL Tech, Wipro, and Infosys.
Textile: Trident and Welspun Living.
Auto and Auto Ancillary: Eicher Motors, Tata Motors, TVS Motor, Bajaj Auto, JBM Auto, Bosch, Amara Raja, and Exide Industries.
