Indian equity markets are set for a strong rally today after India and the US finally reached a long-awaited trade agreement. The deal removes a major uncertainty that has weighed on markets for nearly a year and is expected to give a significant boost to exports. The rupee is also likely to strengthen, while gold and silver have rebounded after recent losses.
Early indicators from Gift City point to a powerful opening. In derivatives trade, Gift Nifty climbed to 25,940 in early morning trade, signalling that the Nifty could open with gains close to 800 points.
Indian IT stocks listed in the US reacted positively to the announcement. Infosys ADRs rose 4.35 percent, while Wipro surged 6.75 percent, reflecting strong optimism around export-oriented sectors.
The India–US trade agreement is expected to push domestic markets to fresh highs, as it removes a key risk factor that had unsettled investors.
Under the agreement:
The US has reduced import duties on Indian goods to 18 percent from 50 percent
The earlier 50 percent duty included a 25 percent penalty imposed on India for purchasing Russian crude
India will stop buying crude oil from Russia and Iran
Crude imports will instead be sourced from the US and Venezuela
India will gradually eliminate import duties on US goods and lift several import restrictions
More details of the agreement are expected to be announced on Sunday.
Marine products and gems will see duties reduced from 25 percent to 18 percent
Gold and silver jewellery will receive an effective tariff benefit of 20.5 percent
Carpets will see a duty cut of 13.7 percent
Bed sheets and curtains will see duties reduced by 27 percent
Apparel and textile products will see duty reductions of up to 37 percent
India also gains a competitive edge over several rival exporting nations. While India will face an 18 percent duty, Vietnam, Bangladesh, Sri Lanka and Taiwan will face 20 percent. Pakistan, Indonesia, Malaysia, Thailand, the Philippines and Cambodia will face 19 percent.
Countries such as China at 34 percent, Brazil at 50 percent, South Africa at 30 percent, Canada at 35 percent and Mexico at 25 percent continue to face much higher US tariffs.
The duty cuts are expected to support Indian exports worth ₹4.38 lakh-crore ($4,820 crore). In 2024–25, India exported goods worth ₹7.87 lakh- crore ($8,651 crore) to the US, with more than half of these products earlier facing tariffs as high as 50 percent.
After slipping nearly two percent following the Union Budget, Indian markets staged a strong relief rally on Monday, with benchmark indices rising over one percent.
Gains were led by oil and gas, automobiles, metals, real estate, capital market stocks and FMCG companies.
A rebound in bullion and industrial metals lifted metal stocks as well as gold loan companies. However, railway stocks such as IRFC, RVNL, RITES and Titagarh Rail Systems fell by up to five percent after no new train announcements in the Budget.
IT stocks underperformed during the session.
Sensex closed at 81,666.46, up 943.52 points or 1.17 percent
Nifty 50 ended at 25,088.40, up 262.95 points or 1.06 percent
Bank Nifty closed at 58,619.00, up 201.80 points or 0.35 percent
Midcap 100 rose 546.80 points or 0.96 percent to 57,667.60
Smallcap 100 gained 105.20 points or 0.64 percent to 16,523.35
Market breadth remained mixed. On the BSE, 1,898 stocks advanced while 2,384 declined. On the NSE, 1,546 stocks rose and 1,631 fell.
Foreign investors remained net sellers, offloading ₹1,832.46 crore in the cash market. Domestic institutions and funds bought shares worth ₹2,446.33 crore.
Technically, the Nifty touched an intraday high of 25,108. If it crosses 25,250 today, resistance is expected in the 25,400–25,600 range. Support is seen at 25,000–24,900.
After two consecutive days of losses, gold and silver have staged a strong rebound, indicating easing interest-rate fears in global markets.
Gold, which fell to $4,404 per ounce on Monday, recovered sharply to close at $4,660.70. Prices jumped nearly four percent on Tuesday morning, moving past $4,840.
Silver also rebounded strongly. After slipping to $71.36 per ounce, it recovered to close at $79.37 and climbed nearly seven percent on Tuesday morning to approach $85.
Investment banks and brokerages have reiterated forecasts that gold could touch $6,000 per ounce and silver could reach $150 later this year.
In Kerala, the price of 22-carat gold fell sharply on Monday. After two rounds of cuts, prices dropped by ₹5,440 per sovereign to ₹1,12,320. Prices are expected to rise today.
The Indian rupee posted strong gains on Monday, with the dollar falling 47 paise to close at ₹91.51. In offshore markets, the dollar slipped further to ₹90.51, indicating potential for additional gains in the rupee.
The dollar index closed at 97.63 and eased to 97.47 in early trade on Tuesday. US 10-year bond yields rose to 4.279 percent.
US equity markets closed higher on Monday despite partial government paralysis, though weakness in select technology stocks limited gains in the Nasdaq and S&P 500.
Concerns related to the appointment of Kevin Warsh as the new Federal Reserve chief eased during the session. Nvidia, which recently announced a $10,000 crore investment in OpenAI, expressed dissatisfaction over certain developments at the company. Nvidia shares fell 2.89 percent during regular trade but recovered nearly one percent after market close.
Dow Jones ended at 49,407.66, up 515.19 points or 1.05 percent
S&P 500 closed at 6,976.44, up 37.41 points or 0.54 percent
Nasdaq finished at 23,592.11, up 130.29 points or 0.56 percent
US futures were trading higher on Tuesday morning. Palantir Technologies jumped six percent after strong quarterly results, while robotics firm Teradyne surged 20 percent after issuing an improved revenue outlook.
European markets ended Monday with gains of more than one percent.
Asian equity markets are trading higher today, supported by relief over the India–US trade agreement.
Japan’s Nikkei rose 3.20 percent, while Australia’s benchmark index gained 1.25 percent. South Korea’s Kospi, which had fallen nearly five percent on Monday, rebounded sharply in early trade, gaining close to five percent.
Chinese and Hong Kong markets recovered around 0.75 percent after sharp losses earlier this week triggered by weak factory output data from China.
Crude oil prices fell sharply after reports that the US and Iran had begun discussions.
Brent crude slipped four percent to $66.26 per barrel, while WTI crude traded at $62.36 and Murban crude at $67.00. Natural gas prices fell to $3.24.
Cryptocurrencies recovered from recent losses. Bitcoin rose above $78,800, Ether moved past $2,350, and Solana climbed above $104.
(As on February 2, Monday)
Sensex 81,666.46 +1.17%
Nifty 50 25,088.40 +1.06%
Bank Nifty 58,619.00 +0.35%
Midcap 100 57,667.60 +0.96%
Smallcap 100 16,523.35 +0.64%
Dow Jones 49,407.70 +1.05%
S&P 500 6,976.44 +0.54%
Nasdaq 23,592.10 +0.56%
Dollar ₹91.51 -0.47
Gold (oz) $4,660.70 -$230.70
Gold (sovereign) ₹1,12,320 -₹5,440
Brent crude $66.26 -$3.06