Indian markets extended a broad-based rally on Tuesday after investors welcomed an India–US trade deal that reduced reciprocal tariffs and eased a key overhang on equities. The Sensex surged over 2,500 points and the Nifty jumped more than 700 points after Washington cut tariffs on Indian goods to 18%.
Market participants said the announcement helped sentiment after months of weakness, while economists and brokerages pointed to potential support for exports and investment. Others cautioned that the economic impact would depend on details and execution.
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‘Diwali From Market’s Perspective’
“Today is true Diwali from market perspective,” said Madhusudan Kela, founder at MK Ventures “What I feel is there was some amount of feel-good feeling that was lacking… markets have seen very, very meaningful corrections,” he said.
“This is a clear market which will now become buy on decline… Everyone’s portfolio had taken a beating in the last 15 months, and something like this is a feel-good feeling,” he added. He said renewed confidence was prompting investors to re-enter the market.
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Trade Deal To Boost FDIs
Pranjul Bhandari, chief India economist at HSBC, said the agreement could lift India’s external sector. “I do think that the trade deal with the US will be pretty good on export growth and FDI inflows,” she said. “Will have to watch out on to bring down oil imports almost to zero,” she added.
“Second is $500 billion—what is the timeline, what are the details, and third India’s export tariffs on the US if they are going to be down on. Is it going to be all goods or some goods?” she said.
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‘Great Boost For The Already Sombre Sentiments’
Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, said, “We believe that this is a great boost for the already sombre sentiments as Indian goods will now be able to compete on the US soil.”
“However, one must also remember that exports to the US is a small part of our US$ 4 trillion GDP,” she said.
“So yes the trade deal is good for the economy and markets in the short term but one must not expect miracles out of it,” she added.
Sheth framed the deal as supportive for sentiment, while limiting expectations on scale, based on exports’ share of GDP.
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Brokerage Lens
Anand Rathi Group said the US–India trade deal should be seen as a medium-term structural positive rather than a short-term trigger. “Sustained execution could meaningfully enhance India’s export competitiveness, manufacturing depth, and global integration,” it said.
“Investors should focus on companies with strong US exposure, scalable manufacturing capabilities, regulatory compliance strength, and balance-sheet resilience to fully capture the opportunity,” the brokerage added. The brokerage positioned the opportunity as tied to execution and company-level attributes, rather than a one-day catalyst.
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