The Indian stock market is poised for a significant upswing on Tuesday, February 3, 2026, fueled by optimism surrounding a newly announced trade agreement between India and the United States. GIFT Nifty futures are trading around 25,939, indicating a substantial gap-up opening for the Nifty 50 and Sensex.
The catalyst for this surge in market sentiment is the trade deal announced by US President Donald Trump following a conversation with Prime Minister Narendra Modi. The agreement includes the reduction of US tariffs on Indian goods from 25% to 18% with immediate effect. Furthermore, India has committed to reducing its tariffs and non-tariff barriers on US products to zero.
President Trump also highlighted India's commitment to purchase over $500 billion worth of US energy, technology, agricultural goods, and coal. Another key component of the deal involves India phasing out its reliance on Russian oil and increasing imports from the United States, and potentially Venezuela.
The announcement has been met with widespread enthusiasm in financial circles. Experts believe the deal will provide a significant boost to Indian equities, particularly for export-oriented sectors such as IT, textiles, pharmaceuticals, and engineering goods. Reduced tariffs are expected to improve the competitiveness of Indian products in the US market, leading to increased exports and higher corporate earnings.
The India-US trade deal is anticipated to have a far-reaching impact on market sentiment and capital flows. The positive news could trigger immediate foreign capital inflows, potentially improving India's Balance of Payments (BoP) position. A stable rupee and easing pressure on domestic interest rates are also expected. Moreover, the anticipated surge in the stock market could create a 'wealth effect', boosting urban consumption and discretionary spending.
Asian markets have also responded positively to the news, with Japan's Nikkei 225 and South Korea's Kospi indices showing significant gains. The US stock market also closed higher overnight, driven by technology and AI-related stocks.
Analysts suggest the trade agreement effectively eliminates key policy uncertainties and positions India as a primary beneficiary of the 'China+1' manufacturing strategy. Ponmudi R, CEO of Enrich Money, noted that the deal offers a strong near-term sentiment boost, especially for export-oriented and manufacturing sectors, while continued government focus on capex provides steady support for the broader market.
While the overall outlook is positive, some analysts point out potential challenges. The shift away from discounted Russian crude oil could negatively impact the margins of refining companies in the short term. It remains to be seen what concessions India has made on agricultural imports and whether the deal will facilitate technology transfer in key areas.
Overall, the India-US trade deal is being hailed as a major breakthrough that is expected to unleash a wave of optimism and investment in the Indian stock market.