India-U.S. Trade Deal Cuts Tariffs to 18%; Sensex, Nifty Surges Nearly 3%

Market Update at 12:22 PM: Indian equity benchmarks extended strong gains on Tuesday, holding on to gap-up momentum after the much-awaited India–U.S. trade deal was finalised on Monday night. Positive global cues and clarity on tariffs boosted investor confidence across frontline stocks, broader markets, and key sectors.

U.S. President Donald Trump announced that the United States has concluded a trade agreement with India, reducing the reciprocal tariff on Indian goods to 18 per cent from the earlier 25 per cent. The move was seen as a major positive for Indian exports and overall market sentiment.

At 12 PM, the BSE Sensex was trading at 84,122.44, up 2,455.9 points or 3.01 per cent. The Nifty50 index stood at 25,849.30, higher by 748.10 points or 2.98 per cent.

Market breadth remained firmly positive, with 27 out of 30 Sensex stocks trading in the green. Gains were led by Adani Ports, Bajaj Finance, Eternal, Bajaj Finserv, Reliance Industries, Infosys, Titan, Mahindra and Mahindra, Larsen and Toubro, IndiGo, Sun Pharma, Trent, HCL Tech, and Maruti Suzuki. These stocks surged between 3 per cent and 7 per cent during the session.

In the broader market, the Nifty MidCap 100 and Nifty SmallCap indices were off their Intraday highs but still posted strong gains of around 2.8 per cent to 2.9 per cent, reflecting broad-based buying interest.

Sectorally, the rally was widespread. The Nifty Auto, IT, Metal, Bank, PSU Bank, and Pharma indices jumped more than 3 per cent each, supported by expectations of improved trade flows, earnings visibility, and risk appetite.

Textile stocks emerged as clear outperformers following the India–U.S. trade deal, given the sector’s export linkage. Shares of KPR Mills, Gokaldas Exports, Trident, Vardhman Textiles, Arvind Ltd, and Welspun Living surged sharply, rising between 11 per cent and 20 per cent on the bourses.

Overall, the India–U.S. trade agreement has injected fresh optimism into Dalal Street, driving a sharp rally across benchmark indices, sectors, and export-oriented stocks.

Market Update at 10:16 AM: Indian equity markets surged sharply at the opening bell on Tuesday, with benchmark indices jumping nearly 5 per cent intraday, driven by optimism around the India–U.S. trade deal that removed a major overhang for investors.

The Nifty 50 opened strong and came within 50 points of its record high levels. As of 9:19 a.m. IST, the Nifty 50 was up 2.81 per cent at 25,799.5, while the BSE Sensex gained 2.83 per cent to trade at 83,977.92. The sharp rise marked the biggest intra-day jump for the benchmarks in the last five years.

Market sentiment was boosted after U.S. President Donald Trump announced a trade agreement with India on Monday. Under the deal, U.S. tariffs on Indian goods will be slashed to 18 per cent from 50 per cent, in exchange for India halting purchases of Russian oil and lowering key trade barriers. The agreement is seen as a significant positive for Indian exports and overall market confidence.

The rally was broad-based, with all 16 major sectoral indices opening higher. Broader markets also outperformed, as Small-Cap and Mid-Cap indices jumped 3.5 per cent each in early trade.

Pre-Market Update at 7:51 AM: The Indian stock market is set for a strong start on Tuesday, 3 February 2026, supported by positive global cues and a major boost in sentiment from the India-U.S. trade deal. Benchmark indices Sensex and Nifty 50 are expected to open sharply higher after a rally in global markets and a strong premium in Gift Nifty.

U.S. President Donald Trump announced that India and the U.S. have agreed on a trade deal following a conversation with Prime Minister Narendra Modi. Under the agreement, the U.S. will reduce reciprocal tariffs on Indian goods to 18 per cent from 25 per cent, while India will lower its tariffs and non-tariff barriers on U.S. goods to zero. This development has significantly improved global risk sentiment, particularly for export-oriented and manufacturing sectors.

Gift Nifty was trading around the 25,939 level, showing a premium of nearly 797 points over the previous close of Nifty futures, indicating a strong gap-up opening for Indian equity indices.

Asian markets traded sharply higher after the announcement of the India–U.S. trade deal and positive cues from Wall Street. Japan’s Nikkei 225 surged 2.44 per cent, while the Topix gained 1.94 per cent. South Korea’s Kospi jumped over 5 per cent, triggering a buy-side circuit breaker, while the Kosdaq rose 2.32 per cent. Hong Kong’s Hang Seng index futures also pointed to a higher opening.

On Monday, Indian equities ended with strong gains, recovering part of the losses from the previous session. The Sensex jumped 943.52 points, or 1.17 per cent, to close at 81,666.46, while the Nifty 50 advanced 262.95 points, or 1.06 per cent, to settle at 25,088.40. Market participants saw selective value buying in infrastructure, Defence and Large-Cap stocks as investors gradually absorbed the Budget impact. The trade deal provided a strong near-term sentiment boost, while the government’s continued focus on capital expenditure offered steady support to the broader market.

U.S. stock markets ended higher overnight, led by technology and artificial intelligence-related stocks. The Dow Jones Industrial Average rose 1.05 per cent to 49,407.66, the S&P 500 gained 0.54 per cent to 6,976.44, and the Nasdaq Composite advanced 0.56 per cent to 23,592.11. Apple shares surged 4.04 per cent, AMD jumped 4.03 per cent, Alphabet rose 1.9 per cent to a record high, and Amazon gained 1.5 per cent. Nvidia declined 2.89 per cent, Microsoft slipped 1.61 per cent, while Micron Technology added 5.5 per cent and SanDisk spiked 15.4 per cent.

U.S. factory activity expanded for the first time in a year. The Institute for Supply Management said manufacturing PMI rose to 52.6 in January from 47.9 in December, marking the highest reading since August 2022. The data exceeded market expectations and added to optimism around global economic growth.

Gold and silver prices rebounded after witnessing their biggest single-day fall in decades in the previous session. Gold prices rose 2.5 per cent to USD 4,778.16 per ounce, while silver prices advanced 4.3 per cent to USD 82.69 per ounce.

The U.S. dollar held firm on the back of positive economic data. The dollar index was little changed at 97.50 after a two-day advance. The euro edged up 0.1 per cent to USD 1.1804, while the yen strengthened marginally to 155.53 per dollar.

Crude oil prices remained stable as investors weighed the possibility of a de-escalation in U.S.–Iran tensions. Brent crude futures rose 0.1 per cent to USD 66.36 per barrel, while U.S. West Texas Intermediate crude gained 0.2 per cent to USD 62.24 per barrel.

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Disclaimer: The article is for informational purposes only and not investment advice.