Benchmarks likely to make gap-up opening amid India-US trade deal

Indian equity markets are likely to make gap-up opening on Tuesday, after U.S. President Donald Trump announced a trade pact with India that cuts U.S. tariffs on Indian goods to 18% from 50%, in return for India stopping Russian oil purchases and easing trade barriers. However, sentiments may remain subdued due to continued outflows from foreign investors.  

Some of the key factors to be watched: 

Lower tariffs under India-US trade pact to aid engineering exports: EEPC India has welcomed the announcement of a trade deal with the US under which Washington will lower reciprocal tariff on Indian goods to 18 per cent from the current 25 per cent, and said it could significantly boost engineering shipments. 

Govt to achieve 4.3% fiscal deficit target for FY27 despite projected dip in GST receipts: S&P Global Ratings said it is confident that the government will achieve its 4.3 per cent fiscal deficit target for FY27 despite a projected dip in goods and services tax (GST) receipts following the rate streamlining in September 2025.

Budget focusses on investment as tool for growth: Finance Minister Nirmala Sitharaman said the Union Budget for FY27 has focussed on investment as a priority tool for boosting consumption, and the trajectory of fiscal deficit shows that the government’s priority is growth. 

Customs revenue target modest, achievable: Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Chaturvedi said the government has projected a modest 5% growth in customs revenue for FY27 after taking into account the impact of free trade pacts, duty exemptions on capital goods imports and tapering of edible oil imports. 

Power stocks will be in limelight: Power consumption in India rose 3.8 per cent to 142.74 billion units in January from 132.5 BUs a year ago, amid increased usage of heating appliances during the intense cold in many parts of north India.  

On the global front: US markets ended in green on Monday following the release of a report from the Institute for Supply Management showing manufacturing activity in the U.S. unexpectedly expanded for the first time in 12 months in January. Asian markets are trading mostly in green on Tuesday on slightly easing concerns about U.S.-Iran friction after U.S. President Donald Trump said he was hopeful of agreeing a deal with Iran helped as well in lifting sentiment. 

Back home, Indian equity benchmarks rebounded on Monday on value buying in blue-chip Utilities, Power and Auto shares after facing a massive drubbing on the Budget day following a hike in securities transaction tax on equity derivatives. A sharp decline in global crude oil prices offered relief to the markets. Finally, the BSE Sensex rose 943.52 points or 1.17% to 81,666.46 and the CNX Nifty was up by 262.95 points or 1.06% to 25,088.40.    

Some of the important factors in trade: 

Budget shows govt’s continued commitment towards maintaining macro stability: Fitch Ratings has said that India's Union Budget shows the government’s continued commitment towards maintaining macro stability through a gradual path of government debt reduction balanced against a still-robust capex program to enhance growth prospects. 

Indian manufacturing growth bounces back in January: The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) surged to 55.4 in January 2026 from 55.0 in December 2025, indicating a stronger improvement in the health of the sector.

Tyre industry’s stocks in watch: Automotive Tyre Manufacturers Association (ATMA) said the Indian tyre industry stands to gain from the government's steps to enhance spending on infrastructure announced in the Union Budget 2026-27.