Sensex soars 4,200 pts; Nifty tops 26,300 intraday as India-US seal deal

Analysts at Bernstein expect the nifty 50 index to reach 28,100 levels by the year-end, an upside of around 8 per cent from the current levels

India's benchmark indices got off to a strong start on Tuesday, with Nifty and Sensex soaring 5 per cent intraday, as India and the US clinched the long-awaited trade deal. 

 

The Nifty index rose as much as 4.99 per cent, or 1,252.8 points, to 26,341, while the 30-stock Sensex advanced 5.15 per cent, or 4,205.2 points, to 85,871, notching the steppest intraday gains since February 1, 2021. As of 9:35 AM, the Nifty and Sensex pared some gains to trade 2.7 per cent and 2.8 per cent, respectively.

 

On the sectoral front, all indices were in the green, with the textile and export-related sectors gaining. Nifty Pharma was up 3.06 per cent, while Nifty Auto was up 3.5 per cent. In the broader market, the Nifty Midcap 100 and Nifty Smallcap 100 indices rose over 3 per cent, each. 

 

India US trade deal: 'Beginning of a D-St boom'

India and the US, after months of negotiations, reached a trade agreement. US President Donald Trump said he would lower his 25 per cent tariff on Indian goods to 18 per cent after India agreed to stop buying Russian oil.  The extra 25 per cent duty on the purchase of Russian oil will also be removed. 

 

The impact of the deal will be manifold, VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said. It could lift growth to about 7.5 per cent in the financial year 2027, accelerate corporate earnings and strengthen the rupee. 

 

Along with the EU deal and a growth-focused Budget, it is set to boost sentiment and drive a market rally as stock prices reflect these gains, he said. This is going to be the beginning of a boom in the Indian stock markets, taking it to new records."

 

The case for a catch-up rally lies less in near-term earnings upgrades and more in the reversal of capital-market pessimism that the tariff shock and diplomatic friction had previously created, Sujan Hajra, chief economist & executive director, Anand Rathi Group, said.  

FIIs to make a comeback

The momentum on Dalal Street was reinforced by the expectations that the global funds, which have been on a selling spree, would come back after the India-US trade deal. So far this year, foreign portfolio investors (FPIs) have sold equities worth ₹34,056 crore, continuing last year's ₹1.6 trillion selloff.

 

With the India-US treaty now in place, that overhang is beginning to lift, Anand Rathi's Hajra said. "As risk premia normalise, India once again looks investable to global capital, a high-growth, politically aligned, strategically important economy with deep domestic demand and improving external linkages to both the US and Europe."

Rupee gains 

The rupee posted its biggest gain in more than three years after the US cut tariffs on Indian goods. The currency opened 1.1 per cent higher at 90.4 against the greenback, and later rose as much as 1.2%, its most since Nov. 11, 2022, to 90.42.

 

Overall, the rupee may see a range of 89 to 92 on the dollar rupee in the coming day, Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said, advising exporters to now increase their hedges to 30-40 per cent.

 

The Indian rupee is expected to rebound back toward 88.5-89 to a dollar in the coming weeks, with foreign portfolio inflows set to reverse course after large outflows, Bloomberg reported, quoting analysts at Elara Capital.  ALSO READ | India-US deal may spark market rally; FIIs seen returning, rupee rising

Budget 2026 comes in line

Nifty and Sensex, on Monday, rose over 1 per cent, signalling a positive momentum a day after the Union Budget 2026. The only announcement that was completely out of the syllabus was the increase in STT on futures and options, analysts said.

 

Sunny Agrawal, head of fundamental research at SBI Securities, said that the impact of higher STT is largely on futures traders, as the incremental cost of trading futures has gone up significantly. "Since most retail investors are predominantly on the buy side in options, this cost increase is unlikely to hamper trading volumes."  ========== 

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