India-US Trade Deal Sparks Historic ₹20 Lakh Crore Wealth Surge on Dalal Street

Indian equity markets witnessed an unprecedented surge during Tuesday’s trading session following the late-night announcement of a landmark trade agreement between India and the United States. Investor sentiment shifted into a high-gear bullish mode, resulting in one of the most significant wealth creation events in the history of the Indian stock market. Within the opening minutes of trade, the total market capitalization of all BSE-listed companies jumped by approximately ₹20 lakh crore, reflecting the massive scale of optimism surrounding the deal.

At the conclusion of Monday’s trading session, the combined market value of BSE-listed firms stood at roughly ₹455 lakh crore. As the markets opened on Tuesday, this figure skyrocketed to nearly ₹475 lakh crore. The rally was ignited by a phone call between Prime Minister Narendra Modi and US President Donald Trump, where both leaders finalized terms that had been under negotiation for months. The deal is being viewed as a major diplomatic and economic victory for the Indian government, coming shortly after the finalization of the India-EU Free Trade Agreement.

Details of the Landmark Trade Agreement

The core of the agreement involves a significant reduction in reciprocal tariffs. The United States has agreed to slash tariffs on Indian goods to 18 percent, down from previous levels that had reached as high as 50 percent in certain categories during the trade tensions of August 2025. This reduction is expected to provide an immediate boost to the cost-competitiveness of Indian exports in the American market. Furthermore, the deal includes the removal of a 25 percent penal duty previously linked to India’s procurement of Russian crude oil, a move that significantly eases geopolitical and economic pressures.

In exchange, India has committed to reducing its own tariff and non-tariff barriers for American products. Reports suggest that India may target a purchase commitment of approximately $100 billion in US goods over the coming years. This reciprocal arrangement is designed to balance trade relations and foster long-term cooperation between the two largest democracies in the world. The immediate implementation of these tariff cuts has provided the market with the clarity it had been seeking for nearly a year.

Market Indices Hit Record Opening Highs

The benchmark Nifty 50 index opened with a staggering gap-up of nearly 1,200 points, marking its largest single-day opening move in absolute terms. The Sensex followed suit, jumping over 4,200 points in early trade. This explosive start was foreshadowed by the GIFT Nifty, which had surged over 1,400 points overnight following the announcement. The rally was broad-based, with heavy participation from both domestic institutional investors and foreign portfolio investors who had been cautious in the preceding months.

Sectoral Impact and Top Gainers

Export-oriented sectors were the primary beneficiaries of the trade deal news. The textile industry saw a massive wave of buying, with several prominent stocks hitting their 20 percent upper circuits within minutes of the opening bell. The reduction in tariffs is expected to significantly improve margins for garment and fabric exporters who rely heavily on the US market. Similarly, marine product exporters, particularly shrimp exporters, saw their stock prices surge as the cost of entry into the US market declined.

The Information Technology sector also received a significant boost. American Depository Receipts (ADRs) of Indian IT giants like Infosys and Wipro traded sharply higher in New York overnight, a trend that carried over to the domestic market. The banking sector, led by HDFC Bank and ICICI Bank, saw strong interest as the deal is expected to strengthen the Indian Rupee and lower the cost of foreign capital. The Rupee itself appreciated by 1 percent in offshore markets following the news.

Analysis of Market Drivers

Several technical and fundamental factors converged to create this historic rally. Analysts point to a massive short-covering rally, as bearish bets placed during a volatile January were quickly unwound. The sudden change in policy direction caught many market participants off guard, forcing them to cover positions at higher prices. Additionally, the deal acts as a catalyst for the return of Foreign Institutional Investors (FIIs), who had pulled out significant capital in early 2026 due to valuation concerns and trade uncertainty.

The removal of the Russian oil penalty is particularly significant for India’s energy and manufacturing giants. Companies like Reliance Industries and those within the Adani Group saw their market valuations rise as the threat of secondary sanctions or penal tariffs diminished. This allows these conglomerates to plan global expansions with greater certainty. The deal is being described by fund managers as a "reset" for India-US relations that could shift the global investment narrative back in India's favor.

Future Outlook and Conclusion

While the initial reaction has been overwhelmingly positive, the long-term sustainability of this rally will depend on the execution of the deal's provisions. Investors will be closely monitoring the final text of the agreement and the progress of India’s $100 billion purchase commitment. There are also domestic factors to consider, such as the upcoming Reserve Bank of India (RBI) monetary policy meeting on February 6, where economists expect the central bank to maintain current interest rates.

In conclusion, the India-US trade deal has provided a powerful stimulus to the Indian equity markets, erasing the gloom of a difficult January. The sharp reduction in tariffs and the resolution of long-standing trade disputes have unlocked significant value across multiple sectors. As the Indian economy continues to integrate more deeply with global markets, such policy-driven milestones will remain critical for maintaining investor confidence and driving corporate earnings growth in the quarters to come.