India-US trade deal announced: Markets likely to open 3% higher today as GIFT Nifty surges nearly 800 points

India-US trade deal announced: Markets likely to open 2.5% higher on Tuesday as GIFT Nifty surges over 600 points

• Indian stocks to open 2.5% higher after US-India trade deal news
• US to lower reciprocal tariff on Indian goods from 25 percent to 18 percent
• India agrees to stop buying Russian oil and purchase more US products

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Indian stock markets are likely to open nearly 3% higher on February 3 as US President Donald Trump on February 2 said he had agreed on a trade deal with India, and that India also agreed to stop buying Russian oil and buy more from the United States and potentially Venezuela.

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%,” Trump said in a social media post following a call with Prime Minister Narendra Modi.

Modi also committed to buy more than $500 billion worth of US energy, technology, agricultural and other products, Trump added.

At 06:49 am on February 3, GIFT Nifty, typically an early indicator of how Indian equities are likely to start trading, was trading 3.07% or 772 points higher. If the GIFT Nifty trend holds on February 3, Nifty would basically give a 1,000-point jump from Budget lows on February 1.

The American Depository Receipts of Infosys and ICICI Bank were trading 4.32% and 1.46% higher, respectively.

The trade deal was a major overhang for Indian equities. Rupee also was under pressure due to foreign outflows.

PM Modi thanked Trump for a trade deal between the two nations on February 2, moments after Trump unveiled a deal reducing reciprocal tariffs on India to 18%.

"Delighted that Made in India products will now have a reduced tariff of 18%," Modi said in a post on X, adding that he looked forward to working closely with the U.S. President.

"India-US trade deal has gone through ups and downs like a roller coaster. While devil is in the details, it removes a hanging sword over rupee, equity and rates market. Let us hope that it is a win-win deal for both the countries as they have lot to gain through cooperation," said Nilesh Shah, MD, Kotak Mahindra AMC.

The Trump administration is dropping a 25% additional tariffs imposed on Indian imports over its purchases of Russian oil, in addition to lowering a country-specific tariff to 18% from 25%, a White House official said on Monday.

"We are also dropping the 25% tariff given India's agreement to stop buying Russian oil," the official said.

Trump announced the changes in a Truth Social post following a call with Modi, but did not explicitly address the 25% tariff he imposed in August to pressure New Delhi to stop buying Russian oil.

In August 2025, Trump announced 50% tariffs on Indian goods being shipped to US, citing India's continued purchase of Russian oil.

On February 2, the Nifty 50 rose 1.06% to 25,088.4, while the BSE Sensex added 1.17% to 81,666.46.

"The reduction in tariffs from 25% to 18% under the newly signed India–US trade deal is a meaningful positive for Indian equities, both from a sentiment and earnings visibility standpoint. The sharp 600-point surge in GIFT Nifty reflects an immediate repricing of risk, driven by expectations of improved trade competitiveness, lower input costs for exporters, and stronger bilateral economic alignment between the two countries.

"From a sectoral lens, export-oriented segments such as IT services, pharmaceuticals, specialty chemicals, auto ancillaries, and select engineering goods stand to benefit the most. Lower tariff barriers improve price competitiveness for Indian firms in the US market, which remains India’s largest export destination. Over time, this could translate into better order inflows, margin stability, and higher capacity utilisation. Domestic manufacturing themes tied to global supply chain diversification also get reinforced.

"At a macro level, the deal signals strategic continuity in India’s trade policy and strengthens India’s positioning as a preferred partner amid ongoing global trade realignments. While the near-term market reaction is understandably sharp, sustainability will depend on execution, sector-specific uptake, and whether earnings upgrades follow. Still, as a signal, this is a clear risk-on trigger," said Sonam Srivastava, Founder and Fund Manager at Wright Research PMS.