Markets Rebound Sharply as India-US Trade Deal Sparks Rally; Sensex Surges, Rupee Gains
Indian equity markets staged a powerful rebound on Tuesday morning, buoyed by news that India and the United States have finally sealed a long-awaited trade deal. The positive development more than offset the sharp losses suffered just two days earlier after the Union Budget triggered heavy selling.
The benchmark Sensex opened with a massive jump of over 3,600 points, briefly crossing the 85,000 mark, after closing at 81,666.46 on Monday. The Nifty50 also witnessed a strong opening, soaring nearly 1,200 points from its previous close of 25,088.40.
All sectoral indices opened firmly in the green, reflecting broad-based buying interest. Realty stocks led the rally, rising over 4 per cent, followed by auto, consumer durables, and IT stocks, which gained between 3 and 4 per cent in early trade. However, by around 10 am, markets pared some of the early gains amid profit-booking, with the Sensex still up more than 2,200 points and the Nifty50 higher by about 650 points.
The upbeat sentiment was not limited to equities. The Indian rupee also strengthened sharply, appreciating nearly 1.2 per cent to trade at 90.40 against the US dollar in the early hours, supported by optimism around improved trade prospects and capital inflows.
Market volatility has dominated the past week, beginning with a relief rally after India and the European Union announced a landmark free trade agreement. That optimism was quickly erased on budget day, when markets plunged nearly 2 per cent following concerns over proposed transaction tax hikes aimed at curbing speculative trading. The sell-off wiped out close to ₹10 lakh crore in investor wealth, marking the worst budget-day performance in six years.
Sentiment turned decisively positive late Monday after US President Donald Trump announced on Truth Social that the India-US trade deal had been finalised. Prime Minister Narendra Modi welcomed the announcement, thanking President Trump on behalf of India’s 1.4 billion citizens.
While detailed terms of the agreement are yet to be made public, US Ambassador to India Sergio Gor told NDTV that tariffs on Indian goods will be reduced to 18 per cent, down sharply from the earlier 50 per cent levy that included penalties related to India’s purchase of Russian crude oil.
The revised tariff structure places India in a more competitive position compared to several Asian export-oriented economies, boosting investor confidence and triggering Tuesday’s strong market rally.
