Key gauges cheer India-U.S. trade deal; Nifty ends above 25,700 mark

Indian equity benchmarks experienced a significant rally and ended with gains of over two and half percent on Tuesday, driven by the long-anticipated India-US trade deal and a strengthening rupee, which boosted expectations of renewed FII inflows.

Some of the important factors in trade:

US tariff reduction on Indian goods positive for labor-intensive sectors: Moody's Ratings said the reduction of the US tariff rate on most Indian goods is credit positive for labour-intensive sectors such as gems, jewellery, textiles and apparel, which are the top export sectors. 

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.

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.

Rupee strengthens against Dollar: Indian rupee emerged as the best-performing Asian currency on Tuesday, rising to the highest levels in two and a half weeks and rallied by around 1.5% against the US dollar, after India and the US agreed to a trade deal.

Global front: European markets were trading mostly in green as commodity markets stabilized, trade and geopolitical tensions eased, and the U.S. Congress prepared to vote on a spending bill to end the government shutdown. Asian markets settled higher after U.S. President Donald Trump announced that he agreed to a trade deal with India, helping ease trade tensions.

Finally, the BSE Sensex rose 2072.67 points or 2.54% to 83,739.13 and the CNX Nifty was up by 639.15 points or 2.55% to 25,727.55.   

The BSE Sensex touched high and low of 85,871.73 and 83,501.22 respectively. There were 28 stocks advancing against 2 stocks declining on the index.        

The top gaining sectoral indices on the BSE were Realty up by 4.79%, Power up by 4.14%, Utilities up by 3.92%, Capital Goods up by 3.71% and Industrials up by 3.44%, while there were no losing sectoral indices on the BSE. 

The top gainers on the Sensex were Adani Ports &SEZ up by 9.12%, Bajaj Finance up by 6.68%, Interglobe Aviation up by 5.51%, Power Grid Corporation up by 4.85% and Sun Pharma up by 4.54%. On the flip side, Tech Mahindra down by 0.57% and Bharat Electronics down by 0.02% were the only losers.

Meanwhile, EEPC India has welcomed the announcement of a trade deal with the United States (US) under which Washington will bring down reciprocal tariff on Indian goods to 18 per cent from the existing 25 per cent. It said the move could provide a major boost to engineering shipments. 

EEPC India’s Vice Chairman, Aakash Shah said ‘while the detailed contours of the agreement are yet to be made public, the Prime Minister Narendra Modi's message clearly mentioned lower tariffs for Made in India products, which is very good news.’ He said that for the fourth year in a row, the US remains India's largest trading partner in 2024-25. He noted that the engineering sector, which constitutes nearly one-fourth of India's total merchandise exports, is expected to be among the biggest beneficiaries of the trade deal. He said the anticipated tariff relief could result in stronger-than-expected growth in engineering exports in the current financial year. He added that the tariff boost should help the engineering industry end the year on a strong note, and also lay the foundation for a much better 2026-27 in terms of global exports.

However, he said it would be premature to quantify the exact impact on engineering exports until the agreement's sector-wise details are formally announced. He said exporters are awaiting clarity on product categories and market access provisions. He said ‘once the finer details are available, we will have a clearer picture of how much Indian engineering exports stand to gain’.  

CNX Nifty touched high and low of 26,341.20 and 25,641.30 respectively. There were 46 stocks advancing against 4 stocks declining on the index.    

The top gainers on Nifty were Adani Enterprises up by 10.58%, Adani Ports &SEZ up by 9.19%, JIO Financial Services up by 8.15%, Bajaj Finance up by 6.67% and Interglobe Aviation up by 5.57%. On the flip side, Tech Mahindra down by 0.66%, Bharat Electronics down by 0.16%, SBI Life Insurance Company down by 0.08% and Nestle India down by 0.07% were the few losers. 

European markets were trading mostly in green; France’s CAC rose 6.23 points or 0.08% to 8,187.40 and Germany’s DAX gained 127.18 points or 0.51% to 24,924.70, while UK’s FTSE 100 decreased 21.44 points or 0.21% to 10,320.12. 

Asian markets settled higher on Tuesday, tracking Wall Street’s gains overnight and easing trade tensions after US President Donald Trump reached a trade deal with India that lowers tariffs and shifts Indian oil purchases away from Russia. The Kospi average soared due to bargain hunting following the previous day's plunge. Japan’s Nikkei surged amid strong earnings from the technology and finance sectors, and as polls showed Prime Minister Sanae Takaichi's party is headed towards a landslide victory in the House of Representatives election on Sunday. Chinese shares rallied, supported by stabilized sentiment in global metals markets and positive economic signals from both domestic manufacturing data and strong US factory activity.