GIFT Nifty Explodes 400 Points After US Supreme Court Declares Trump Tariffs ‘Illegal’ — Is This the Start of a Bigger Breakout for Indian Markets?
In a dramatic overnight development that sent shockwaves through global financial markets, the US Supreme Court struck down sweeping global tariffs imposed by US President Donald Trump, declaring key elements of the tariff regime unlawful. The verdict dismantles a substantial portion of duties that had been imposed under emergency powers and immediately reduces a major layer of trade uncertainty that had weighed heavily on emerging markets, including India.
Reacting sharply to the news, GIFT Nifty surged nearly 400 points from its intraday low on Friday. The spike signals expectations of a strong opening for domestic benchmark indices and reflects investor confidence that geopolitical trade risks have eased materially. Market participants interpreted the ruling as a structural reset in global trade policy rather than a temporary relief move, leading to aggressive buying in futures markets.
The ruling halts much of the tariff framework first introduced on “Liberation Day” early in Trump’s second term — a move that had previously triggered volatility across global equity markets and intensified capital outflows from risk-sensitive economies.
Court Rejects Use of Emergency Powers Under IEEPA, Dismantling Core Tariff Mechanism
At the centre of the case was the administration’s use of the International Emergency Economic Powers Act (IEEPA) to justify broad-based import tariffs. The majority opinion concluded that the scope of emergency authority had been applied too broadly, effectively invalidating the legal foundation of the tariff regime.
In his dissent, Justice Brett Kavanaugh acknowledged that the tariffs touched upon foreign affairs and were used as negotiating leverage with major trade partners including China, the United Kingdom, and Japan. He noted that the administration argued the measures helped open foreign markets for US businesses and supported trade deals worth trillions of dollars, particularly within the broader context of efforts to end the Russia–Ukraine conflict.
However, the majority ruling decisively curtailed that interpretation, removing a key pillar of Trump’s trade strategy. For markets, the message was clear: a significant policy overhang had been lifted.
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India Gains Strategic Leverage as Trade Negotiation Dynamics Shift
For India, the implications of the Supreme Court’s ruling are both immediate and strategic. New Delhi had faced a 25 percent reciprocal tariff, along with an additional 25 percent punitive levy linked to purchases of Russian oil. Although the reciprocal tariff was later reduced to 18 percent and the punitive levy withdrawn after India committed to adjusting its energy procurement strategy, uncertainty around the broader tariff framework persisted.
With the court dismantling much of that structure, India now gains renewed leverage in ongoing trade discussions with Washington. The bargaining dynamics shift in favour of New Delhi, as the legal basis for sweeping tariff impositions has been narrowed. This development strengthens India’s negotiating position in shaping future trade arrangements and potentially accelerates progress toward a more stable bilateral framework.
Here’s What Happened Today and Why Traders Reacted
The sharp reaction in GIFT Nifty was not random — it was driven by a sequence of high-impact developments that directly influence risk appetite.
Here’s what unfolded:
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US Supreme Court invalidated key Trump-era global tariffs
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Legal backing under IEEPA was significantly curtailed
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Global trade uncertainty reduced overnight
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India’s geopolitical risk premium declined immediately
Traders reacted aggressively because tariff uncertainty had been a persistent overhang on Indian equities throughout 2025 and into early 2026. Export-oriented sectors, particularly IT, pharmaceuticals, auto components, and engineering goods, had factored in earnings risks due to trade friction. With that uncertainty easing, futures markets quickly priced in improved earnings visibility and lower macro risk.
The move suggests that the Nifty50 and the BSE Sensex could witness strong momentum in the coming sessions if global cues remain supportive.
How Tariff Tensions Had Weighed on Indian Markets Over the Past Year
Indian equity markets had endured prolonged volatility due to trade-related disruptions. At the height of tensions:
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Sensex and Nifty corrected nearly 3 percent within a single month
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Foreign Institutional Investors (FIIs) withdrew over $22 billion in 2025
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The rupee hit record lows multiple times amid capital outflows
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Export-heavy companies faced margin and order flow uncertainty
Although a February 2, 2026 breakthrough in trade discussions triggered partial recovery, Friday’s Supreme Court ruling introduces a more decisive policy reset. It reduces the probability of sudden tariff escalations and enhances confidence in predictable trade policy.
What Impact Could This Have on Investor Portfolios?
For investors, the ruling has multi-layered implications that extend beyond a single trading session.
Short-term impact:
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Likely rally in export-focused stocks
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Improved sentiment in IT and pharma counters
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Potential reversal of FII outflows
Medium-term considerations:
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Reduced geopolitical risk premium embedded in valuations
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Strengthening rupee outlook if foreign inflows resume
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Improved earnings guidance stability for US-exposed companies
Investors with diversified portfolios may see enhanced performance in sectors tied to global trade. Companies dependent on US revenue streams stand to benefit the most if tariff risks remain subdued.
Additionally, renewed foreign inflows could improve liquidity conditions, supporting broader market participation and potentially pushing benchmark indices toward fresh highs.
What Could Happen in the Coming Days as Markets Reprice Risk?
While the immediate reaction has been strongly positive, markets will closely monitor follow-up actions from the US administration and potential political responses. Volatility cannot be ruled out, especially if legal or executive countermeasures emerge.
Key factors to watch include:
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Direction of FII flows
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Movement in the rupee
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Sectoral rotation toward exporters
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Official statements from Washington
If stability persists and foreign capital returns, the relief rally could transform into a sustained uptrend.
A Structural Reset in Trade Sentiment May Be Underway
The Supreme Court’s decision represents more than a legal setback for Trump’s tariff strategy — it reshapes the global trade narrative. For India, it reduces policy unpredictability and strengthens its strategic position in ongoing negotiations.
The 400-point surge in GIFT Nifty signals that investors view this as a meaningful turning point rather than a temporary bounce. Whether this momentum evolves into a broader rally will depend on sustained clarity and supportive global cues, but for now, Indian markets appear poised to capitalise on a significant easing of trade tensions.
