Indian equity benchmarks witnessed a blockbuster session on Tuesday. Fuelled by a landmark US-India trade agreement, investor sentiment improved sharply and both benchmarks, Sensex and Nifty, zoomed ahead and created a record making rally in today's trade.
The BSE Sensex skyrocketed more than 2,000 points and closed above 83,700, while the NSE Nifty50 ascended over 600 points and settled for the session just over 25,700. Markets surged in pre-opening trade this morning after Washington announced it would cut tariffs on Indian goods to 18 per cent from 50 per cent. The breakthrough deal has triggered one of the strongest rallies seen in recent months, with equities gaining momentum right from the opening bell and sustaining strength through the session.
Trade Deal Ignites Market Euphoria
Both benchmark indices were trading nearly 3 per cent higher during the afternoon session on Tuesday as investors cheered the tariff reduction announcement.
After opening on a buoyant note, the Sensex soared 4,205.27 points, or 5.14 per cent, to hit an intra-day high of 85,871.73. The Nifty surged 1,252.8 points, or 4.99 per cent, to touch 26,341.20.
The sweeping rally followed comments by US President Donald Trump on Monday after a phone conversation with Prime Minister Narendra Modi. Trump said the US would reduce the reciprocal tariff on Indian goods to 18 per cent, a move widely seen as restoring predictability for exporters and corporate planners.
The tariff reduction is widely seen as strengthening India’s export competitiveness, particularly in sectors with significant exposure to the US market.
Export-Focused Stocks Lead The Charge
Market gains were led by companies expected to benefit directly from improved trade access. Among Sensex constituents, Adani Ports surged 9.12 per cent. Bajaj Finance, InterGlobe Aviation, Power Grid, Sun Pharma, Bajaj Finserv and Reliance Industries were also among the prominent gainers. Tech Mahindra and Bharat Electronics were the only laggards in the 30-share index.
In the broader markets, the Nifty Microcap250 soared 3.72 per cent. Sectorally, the Realty and Chemicals indices rallied 4.79 per cent and 3.84 per cent respectively.
The positive sentiment extended beyond large caps. Textile, leather, gems and jewellery, seafood export and specialty chemical stocks witnessed a sharp rally, reflecting optimism around stronger US-bound shipments.
Vinod Nair, Head of Research at Geojit Investments Limited, said the agreement had been a long-awaited trigger for the markets.
“Indian equities experienced a significant rally today, driven by the long-anticipated India–US trade deal and a strengthening rupee, which boosted expectations of renewed FII inflows. The reduction of US tariffs on Indian goods from 50 per cent to 18 per cent enhances India's competitive position among emerging markets and bolsters the outlook for export-oriented sectors with high US exposure, such as textiles, aquaculture, gems and pharmaceuticals, which were supported in the 2026 Union Budget,” Nair said.
Rupee Strength, FII Hopes Add Momentum
Apart from trade optimism, a strengthening rupee further lifted investor confidence, improving the outlook for foreign institutional investor (FII) flows.
On Monday, FIIs had offloaded equities worth Rs 1,832.46 crore, while Domestic Institutional Investors (DIIs) purchased shares worth Rs 2,446.33 crore, according to exchange data.
The improved trade outlook has raised expectations that foreign investors may reassess their India positioning, particularly as export-oriented sectors gain fresh visibility.
Global Markets Join The Rally
The upbeat mood was not limited to Dalal Street.
Asian markets also posted strong gains, with South Korea’s Kospi rebounding sharply by nearly 7 per cent. Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng ended higher.
European markets were trading in positive territory, while US markets had closed higher on Monday.
Meanwhile, Brent crude, the global oil benchmark, declined 0.65 per cent to USD 65.87 per barrel, offering additional comfort on the inflation front.
A Sharp Turnaround From Monday’s Gains
Tuesday’s surge built on Monday’s positive momentum. In the previous session, the Sensex had jumped 943.52 points, or 1.17 per cent, to close at 81,666.46, while the Nifty rose 262.95 points, or 1.06 per cent, to end at 25,088.40.
The trade agreement has now provided markets with a clear directional catalyst, shifting sentiment decisively towards risk-taking.
What Comes Next?
While Tuesday’s rally was driven primarily by the tariff cut announcement, market participants will now watch how quickly the agreement translates into tangible export growth and sustained foreign inflows.
For now, the India-US trade deal has delivered what markets had been waiting for: a strong policy trigger capable of lifting confidence and pushing benchmark indices sharply higher.