India-US trade deal fuels bull run as Sensex, Nifty soar nearly 5 per cent

Indian equity benchmarks staged a sharp rally in early trade on February 3, with the Sensex and Nifty surging nearly five per cent, after India and the United States reached a trade deal under which Washington agreed to sharply cut reciprocal tariffs on Indian goods. Investor sentiment was buoyed by expectations of stronger exports and improved growth prospects following the announcement.

The 30-share BSE Sensex jumped 3,656.74 points to 85,323.20 in opening trade, while the NSE Nifty surged 1,219.65 points to 26,308.05. The rally intensified as trading progressed, with the Sensex zooming 4,205.27 points, or 5.14 per cent, to 85,871.73. The Nifty climbed 1,252.80 points, or 4.99 per cent, to 26,341.20.

The surge came after US President Donald Trump said on Monday that India and the US had agreed to a trade deal during a phone conversation with Prime Minister Narendra Modi. Under the agreement, the US will reduce reciprocal tariffs on Indian goods to 18 per cent from the existing 25 per cent, a move seen as a major positive for Indian exporters and the broader economy.

Heavyweight stocks led the rally on Dalal Street. From the Sensex pack, Adani Ports, Bajaj Finance, Eternal, Bajaj Finserv, InterGlobe Aviation and Reliance Industries were trading sharply higher, gaining between 3.7 per cent and 7.2 per cent. ITC was the lone laggard among blue-chip stocks.

Market experts termed the development a turning point for Indian equities. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the long-awaited US–India trade deal and the sharp cut in tariffs was a “game changer” for the Indian economy and stock markets. He added that the combination of the US–India trade agreement, the EU–India trade deal and a growth-oriented Union Budget is expected to significantly boost market sentiment and economic activity, with markets already discounting these positives.

Global cues were also supportive. In Asia, South Korea’s Kospi rebounded sharply, jumping around five per cent, while Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng indices were trading higher. US markets had ended on a positive note on Monday.

On the institutional front, foreign institutional investors sold equities worth Rs 1,832.46 crore on Monday, while domestic institutional investors provided support by buying shares worth Rs 2,446.33 crore, according to exchange data. Meanwhile, Brent crude oil prices slipped 0.51 per cent to USD 65.96 per barrel.

The rally builds on Monday’s gains, when the Sensex rose 943.52 points, or 1.17 per cent, to close at 81,666.46, while the Nifty advanced 262.95 points, or 1.06 per cent, to end at 25,088.40.