Sensex and Nifty Surge 5% as India-US Trade Deal Slashes Tariffs

Domestic equity benchmark indices, the BSE Sensex and NSE Nifty 50, witnessed a historic surge in the early trading session on Tuesday, February 3, 2026. The rally was triggered by the announcement of a landmark trade agreement between India and the United States. Under this deal, Washington has agreed to reduce the reciprocal tariff on Indian goods to 18 percent, down from the previous level of 25 percent. This development has significantly boosted investor sentiment, providing a much-needed catalyst for the Indian markets.

Explosive Opening for Benchmark Indices

The 30-share BSE Sensex opened with a massive gap-up, jumping 3,657 points to reach 85,323 in the first few minutes of trade. Similarly, the 50-share NSE Nifty surged 1,220 points to open at 26,308. As the session progressed, both indices extended their winning momentum. The BSE benchmark eventually zoomed 4,205 points, or 5.14 percent, to hit an intraday high of 85,872. The Nifty followed suit, jumping 1,253 points, or 4.99 percent, to touch 26,341.

Details of the India-US Trade Agreement

The primary driver of this market euphoria was the trade deal confirmed by US President Donald Trump following a phone conversation with Prime Minister Narendra Modi. The agreement focuses on lowering trade barriers and reducing reciprocal tariffs. Specifically, the reduction of tariffs on Indian goods to 18 percent is expected to enhance the competitiveness of Indian exports in the American market. This move is seen as a strategic shift that could redefine bilateral economic relations for the coming years.

Sectoral Performance and Top Gainers

The rally was broad-based, with almost all sectoral indices trading in the green. Within the Sensex pack, Adani Ports led the gains with a surge of over 9 percent. Other prominent performers included Bajaj Finance, Eternal, Bajaj Finserv, InterGlobe Aviation, and Reliance Industries, which saw gains ranging between 3.7 percent and 7.2 percent. These companies, particularly those with significant export exposure or infrastructure interests, are expected to be the primary beneficiaries of the improved trade terms. Conversely, ITC emerged as the sole laggard among the blue-chip stocks during the early session.

Market Movement Summary

Expert Analysis on Economic Impact

Market strategists have described the trade deal as a potential game-changer for the Indian economy. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that the combination of the US-India trade deal, a potential EU-India agreement, and a growth-oriented Budget would significantly boost market sentiment. He emphasized that the stock market is currently discounting these developments, which could revive "animal spirits" in the economy and lead to a sustained period of growth.

Global Market Context

The positive sentiment was not restricted to India. Asian markets also reacted favorably to the global trade developments. South Korea’s Kospi rebounded sharply, jumping 5 percent, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng index were also trading higher. US markets had ended on a positive note on Monday, providing a supportive backdrop for the opening of the Indian session. The global risk-on sentiment has been further supported by a slight dip in Brent crude prices, which fell 0.51 percent to USD 65.96 per barrel.

Institutional Activity and Currency Trends

On the institutional front, exchange data from Monday showed that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,832.46 crore. However, Domestic Institutional Investors (DIIs) provided support by purchasing stocks worth Rs 2,446.33 crore. The Indian Rupee also showed signs of strength, appreciating by approximately 1 percent against the US Dollar. This currency stability is expected to encourage further foreign capital inflows as the tariff clarity improves corporate earnings visibility for the next fiscal year.

Top Performing Stocks in Focus

Technical Outlook for Nifty

From a technical perspective, the Nifty 50 has successfully reclaimed its post-Budget losses. Analysts suggest that the index is now testing crucial resistance levels near 26,500. Momentum indicators like the Relative Strength Index (RSI) are moving out of oversold territory, suggesting that the bullish trend may have further room to run. Immediate support for the Nifty is now placed in the 25,800-26,000 zone, which is expected to act as a cushion during any minor profit-booking phases.

Conclusion

The dramatic rally on Dalal Street reflects a fundamental shift in investor expectations following the India-US trade deal. By addressing long-standing tariff concerns, the agreement paves the way for enhanced export volumes and stronger corporate earnings. While short-term volatility may persist as markets digest the full implications of the deal, the overall trajectory remains positive. Investors will now be closely monitoring FII flow patterns and upcoming corporate earnings reports to gauge the sustainability of this momentum.