The Indian stock market is expected to open significantly higher on February 3, 2026, buoyed by the announcement of a trade deal between India and the United States. Gift Nifty futures were trading at 25,920 points, indicating a gap-up opening of around 3% for the Nifty 50 index.

Key Highlights of the India-US Trade Deal:

• Tariff Reduction: The United States will reduce tariffs on Indian goods from 50% to 18%. Some sources say the tariff was reduced from 25% to 18%.
• India's Commitments: In exchange, India will halt Russian oil purchases and lower trade barriers for US goods. India is also expected to increase imports from the US by $500 billion.

Market Impact and Expert Opinions:

• Positive Sentiment: The trade deal is expected to boost investor confidence and trigger foreign capital inflows. Analysts believe this deal addresses geopolitical isolation, a key concern for investors.
• Rupee and Interest Rates: The deal may stabilize the rupee and ease pressure on domestic interest rates.
• Economic Boost: Increased investor confidence could drive discretionary spending and boost urban consumption.
• Analyst Perspective: According to Siddhartha Sanyal, Chief Economist, Bandhan Bank, the end of the stalemate and the direction of the development is more important than the quantum of tariff change, as it opens room for further positive developments. Sonam Srivastava, founder and fund manager at Wright Research PMS, said that the cut in tariffs represents a clear positive for Indian equities, benefiting both market sentiment and corporate earnings.

Sectoral Outlook:

• Export-Oriented Sectors: IT and textiles are expected to lead the market rally due to reduced US tariffs.
• Beneficiaries: Labor-intensive sectors like textiles, gems and jewellery, and engineering goods are likely to benefit from the tariff reductions. Other sectors that could see gains include auto, and pharma.
• Energy Sector: The energy sector is also likely to see movement due to India's shift away from Russian oil.
• Financial Sector: The banking and financial sectors are expected to provide crucial support to the Nifty.

Cautions:

• Volatility: Despite the positive sentiment, Indian equity markets may remain volatile due to the ongoing analysis of the Union Budget 2026, global market cues, and the upcoming Reserve Bank of India (RBI) monetary policy outcome.

Overall, the India-US trade deal is a positive development for the Indian stock market, with the potential to attract foreign investment, boost key sectors, and strengthen the overall economy.