Markets likely to stage smart rally, GIFT Nifty soars 700 points as India-US announce trade deal

Nifty, Sensex set to record sharp gains at open.

• Nifty 50 and Sensex set to open higher after India US trade deal announcement
• US cuts tariff on Indian goods to 18%; India to reduce barriers on US products.
• Punitive levy on Indian Russian oil purchases removed under new agreement

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Domestic benchmarks Nifty 50 and Sensex are likely to start the Tuesday, February 3 session with sharp gains as India and U.S. announced their long-awaited trade deal.

At 6.45 a.m., the GIFT Nifty index was quoting 25,917, higher by 700 points or 3.1 percent.

US President Donald Trump said late on February 2 that Washington had reached an agreement with New Delhi following a phone call with Prime Minister Narendra Modi. Under the deal, the US has reduced its reciprocal tariff on Indian goods to 18 percent from 25 percent with immediate effect, while India has committed to lowering tariffs on American products, removing non-tariff barriers and increasing purchases of US energy, technology, agricultural products and coal.

Prime Minister Modi said the agreement would support “Made in India” exports and strengthen economic ties between the two countries, underscoring the strategic importance of the pact beyond near-term market reactions.

Responding to a query on the 25 percent punitive levy imposed on India for purchasing Russian oil, US Ambassador Sergio Gor confirmed that the charge would no longer apply under the new agreement.

“That is correct! As you saw in the Truth (Social) that the President wrote, part of the agreement is that all nations around the world stop buying oil from Russia in order to bring peace to the situation, and I know the Prime Minister deeply cares about bringing peace in the conflict as does President Trump. So the number as we get finalised will be 18 percent,” he said.

On other assurances outlined by Trump in his Truth Social post, Gor said discussions would continue at the negotiators’ level, while underlining the broader significance of the announcement.

"With valuations corrected and fundamentals rock-solid, this should draw FIIs back to Indian markets in the short term. A large chunk of US FII capital will likely shift here, viewing India as the premier strategic play among emerging markets. The current high pessimism? It’ll get trapped in a sharp rally fueled by short covering. DIIs and retail will pile in, amplifying flows from all sides—get ready for the upside!" said Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS.

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