India-US trade deal: GIFT Nifty surges 800 points on Trump-Modi announcement; stock market set for strong rally? – The Times of India
With the India-US trade deal announced, the stock market is expected to rally strongly in trade on Tuesday. A surge in GIFT Nifty already points to a gap up opening in BSE Sensex and Nifty50 on Tuesday. The India-US trade deal slashes tariffs on Indian exports to 18% and it is being reported that the 25% penal tariff for Russian crude will also be removed.GIFT Nifty surged by nearly 800 points before paring some gains, indicating a widespread relief-driven rally across markets. The rise followed remarks by US President Donald Trump that Washington would lower reciprocal tariffs on Indian goods to 18%, while New Delhi would move to reduce both tariff and non-tariff barriers on US imports.Also Read | India-US trade deal announced by US President Donald Trump; check detailsFor investors, the India-US deal effectively lifts a significant cloud that had kept overseas funds on the sidelines and contributed to sustained weakness in Indian equities. Markets had a difficult January, with the Nifty at one stage sliding more than 1,000 points, as foreign portfolio investors offloaded stocks worth billions of dollars.Uncertainty around trade policy, pressure on the rupee and a persistent global risk-off mood had left Indian equities lagging other major markets. Market participants have long maintained that progress on the India-US trade negotiations will serve as the key catalyst for a reversal in sentiment.Sonam Srivastava, founder and fund manager at Wright Research PMS told ET that the cut tariffs from 25% to 18% represents a clear positive for Indian equities, benefiting both market sentiment and corporate earnings. “The strong rise in GIFT Nifty signals an immediate reassessment of risk, fuelled by expectations of improved trade competitiveness, reduced cost pressures for exporters and closer economic alignment between the two countries,” she said.Also Read | Lower than Pakistan, China: In trade deal with US, India secures a favourable tariff rateShe noted that sectors with a strong export focus are likely to see healthier order flows and more stable margins over time, although the durability of the market rally will hinge on the extent to which earnings estimates are revised upward.Garima Kapoor, deputy head of research and economist at Elara Capital, said the 18% tariff rate places India nearer to comparable economies that face similar levies. She added that if penalties related to Russian oil purchases are also withdrawn, India could benefit from a more advantageous tariff position. According to her, the overall trajectory of the agreement is clearly constructive and supportive for Indian assets, even if tariff barriers have not yet been fully done away with.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)