Benchmarks see best day in over 8 months after India-US trade deal

Sensex, Nifty zoom 2.5%; market capitalisation of BSE-listed firms rises by about ₹12 trillion to ₹467 trillion

Domestic equities surged on Tuesday, posting their best single-day gains in more than eight months after a long-awaited trade deal between India and the US. The deal, which lowered tariffs on Indian goods to 18 per cent from 50 per cent, significantly improved investor sentiment and lifted a key overhang for the market. 

 

The Sensex climbed as much as 4,025 points during the session before paring some gains to close at 83,739, up 2,073 points, or 2.5 per cent. 

 

The Nifty ended at 25,728, gaining 639 points, or 2.5 per cent. At one point, the index came 50 points shy of a new high. For both indices, this marked the strongest daily performance since May 12, 2025.

 

 

The total market capitalisation of BSE-listed companies rose by about ₹12 trillion to ₹467 trillion.

 

The trade agreement comes five months after the US imposed a 50 per cent tariff on Indian goods, including an additional 25 per cent levy linked to India’s purchases of Russian oil. US President Donald Trump said India had agreed to stop buying Russian oil and instead increase purchases from the US. He also said India would move to reduce tariffs and non-tariff barriers on US goods to “zero”.

 

Elevated US tariffs had been a key drag on market sentiment over the past quarter.

 

“We expect FPI-heavy sectors such as financials and IT services to benefit from the return of FPI inflows, primarily through valuation multiple expansion,” said Kunal Vora, executive director and head of India equity research at BNP Paribas. “On earnings, when the US levied tariffs on Indian exports earlier, we did not see a meaningful impact on Nifty 50 earnings. As a result, the earnings upside from a reversal is likely to be limited.”

 

The deal is expected to ease Indian equities’ underperformance relative to their emerging-market peers. However, market participants cautioned that Tuesday’s sharp rally may not sustain in the absence of a broader recovery in corporate earnings.

 

“When such events occur, the initial rally is often driven by short covering,” said Pramod Gubbi, cofounder of Marcellus Investment Managers. “In the near term, sentiment matters, and the deal provides a much-needed boost. Some sectors directly exposed to lower tariffs will see benefits in order inflows and earnings, but these are unlikely to be large enough to carry the broader market. If export orders pick up, there could be some improvement in the current account deficit, which may help arrest the rupee’s decline.”

 

Stocks with high exposure to the US market — particularly in textiles, jewellery, and aquaculture — hit their upper trading limits. Shares of Apex Frozen Foods and Avanti Feeds rose 20 per cent each, while rice exporter LT Foods gained 14.3 per cent.

 

Adani Group stocks rose between 1.2 per cent and 10.6 per cent. Adani Enterprises jumped 10.4 per cent, its sharpest gain since November 27, 2024. Reliance Industries advanced 3.4 per cent, its biggest single-day rise since October 20, 2025.

 

Foreign portfolio investors (FPIs) were net buyers of ₹5,236 crore, their biggest net buying since October 28, 2025, while domestic institutions were net buyers of ₹1,014 crore.