Tuesday, February 3, 2026 — Indian markets woke up with a jolt this morning. The long-anticipated India–United States trade agreement, announced late Monday, triggered one of the most explosive rallies in years on Dalal Street. Benchmarks didn’t just move up; they jumped. Investors who had been cautious suddenly found reasons to buy again.
The headline number making rounds on the trading floors is ₹20 lakh crore; that’s roughly the amount by which the combined market capitalization of companies listed on the BSE shot up early in the session after the trade deal was confirmed.
But let’s unpack this: it wasn’t a trickle of optimism. It was a burst.
What Changed — The Core of the Deal
At the heart of today’s frenzy is a sharp tariff cut.
For months, India’s exporters had been grappling with punitive U.S. tariffs, some as high as 50%, on goods shipped to America. That pushed Indian exporters out of price competition against Bangladesh, Vietnam, and others. Today’s agreement slashes that effective tariff down to about 18%, a level now not just more palatable but, in some cases, more competitive than rival Asian producers.
In return, India agreed to halt purchases of Russian oil and lower certain trade barriers for U.S. goods entering India. The precise implementation timelines and the details on enforcement remain a talking point among analysts, but the headlines alone were enough to spark buying.
This isn’t mere political pageantry. A tariff shift of this magnitude changes earnings prospects for exporters in a material way, especially in sectors where the U.S. accounts for a large share of sales.
Markets React: Benchmark Surge, Broad Sector Gains
The immediate market response was unmistakable:
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The Sensex shot up more than 2,300 points in early trade, a big up-move by any measure.
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The Nifty50 climbed nearly 3%, crossing key psychological levels as optimism spread.
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Stocks across all major sectors turned green, export-linked and domestically oriented alike.
Even the Indian rupee felt the impact. Traders saw the rupee strengthen meaningfully against the dollar, rallying more than 1% as capital seemed to flow back toward Indian assets after weeks of foreign selling pressure.
Bond markets responded too: India’s 10-year yield eased about five basis points, signaling some relief on inflation expectations and global flows.
This wasn’t a narrow rally. The breadth told its own story: textile exporters, auto ancillary makers, seafood shippers, and engineering names all felt the uplift.
Who Stood Out: Sectors & Stocks That Lit Up
The stocks and sectors that led the charge were not random:
Textiles & Apparel
These were the biggest beneficiaries on volume alone. Companies such as Gokaldas Exports, KPR Mill, Welspun Living, and others saw sharp rallies, with several hitting 20% upper circuit limits early in trade. US importers of Indian textiles had been wary of the earlier punitive tariff regime; with costs now tamed, margins and order books look brighter.
Shrimp and Seafood
Seafood exporters like Avanti Feeds and Apex Frozen Foods also drove heavy flows today, again up as much as 20%.
Auto Components & Engineering
Names with deep North American linkages from Bharat Forge to Ramkrishna Forgings drew fresh interest.
Chemicals & Specialty Goods
Specialty and agrochemical players with U.S. exposure joined the rally, lifting niche export segments.
IT Stocks on Wall Street
It wasn’t just local markets. Over in the U.S., stocks like Infosys and Wipro surged in ADR trading after the tariff reduction news, as investors priced in better near-term outcomes for contract margins and currency stability.
Bigger Picture: Confidence Returns (Tentatively)
Market experts say what’s happening now isn’t just technical it’s psychological.
For months, Indian equities were under pressure as foreign institutional investors pulled back, citing tight tariff regimes, currency volatility, and lackluster earnings. A deal of this scale removes a big overhang: it restores some clarity on export competitiveness and sends a signal that policy risk in India’s trade relations is easing.
Veteran investors went on record saying this could mark the end of the small-cap bear market, as cheaper financing and renewed optimism attract buyers back to segments that had struggled.
Industry leaders chimed in too: from strategic conglomerates to asset managers, voices described the pact as not just a win for markets but also for broader economic ties between the two nations.
What Comes Next: Caution with Optimism
No trade deal materializes without unanswered questions. Timelines remain vague, and enforcement mechanisms aren’t public yet. Markets, by nature, are forward-looking — but today’s bounce may well be as much about relief as about reality.
Still, if the tariff cuts stick and trade flows recover, earnings for exporters could see sustained improvement. Coupled with improved investor confidence, this can have longer-term implications for fund flows and valuations.
For now, though, the sentiment is clear: the market got the jolt it wanted, and money followed quickly.
