Indian Markets Set to Soar After US-India Trade Deal Announcement
Indian financial markets are poised for significant gains following a major breakthrough in international trade relations. The announcement came late on Monday when US President Donald Trump revealed that the United States has reached a trade agreement with India, ending months of negotiations and uncertainty.
Market Recovery and Positive Momentum
A day after Sensex and Nifty rallied over 1% to recover most losses suffered on Budget day, indications suggest that Tuesday's trading session could see even more substantial gains. The positive sentiment stems directly from President Trump's announcement that followed his call with Indian Prime Minister Narendra Modi, confirming that the long-pending trade deal between the two economic powerhouses has finally been agreed upon.
Immediately after the announcement, the Gift Nifty index experienced a sharp surge, closing 630 points or 2.3% higher at 25,765 points. Market analysts and participants widely believe this development will have a profoundly positive impact on both the Indian economy and financial markets in the coming days and weeks.
Expert Analysis on Trade Deal Implications
Siddhartha Sanyal, Chief Economist at Bandhan Bank, emphasized the significance of this development, particularly noting the reduction of US tariffs on Indian goods. "The news of reduction of US tariff on India is a major positive, especially soon after the trade deal with the EU," Sanyal stated. He further explained that "the end of the stalemate and the direction of the development is more important in this case than the quantum of the change in tariff as it opens room for further positive developments in near future."
Monday's Trading Session Performance
During Monday's trading activities, after beginning with a relatively flat opening, Sensex gathered momentum throughout the day and closed with an impressive gain of nearly 950 points at 82,666 points. Similarly, Nifty demonstrated strong performance, rising 263 points to reach 25,088 points by the session's end.
The trading session was primarily supported by domestic institutional investors, who emerged as net buyers with investments totaling Rs 2,446 crore, according to BSE data. In contrast, foreign institutional investors were net sellers, divesting Rs 1,832 crore during the same period.
Sectoral Performance and Market Breadth
Buying activity was widespread across most sectors, with only minor profit-taking observed in IT and healthcare stocks that had seen gains on Budget day. The BSE's midcap index closed 0.8% higher, while the smallcap index registered a 0.2% increase.
Among sectoral indices, several showed particularly strong performance:
- BSE Utilities Index closed 2.7% higher
- BSE Power Index gained 2.5%
- BSE Services Index rose 2.4%
Market Capitalization and Wealth Creation
The day's positive trading session resulted in substantial wealth creation for investors, with total market wealth increasing by approximately Rs 4.6 lakh crore. This brought the BSE's total market capitalization to Rs 455 lakh crore, according to available data.
Among the 30 Sensex constituents, 25 companies closed higher, with Reliance Industries, ICICI Bank, and Larsen & Toubro contributing most significantly to the index's daily gains.
Market Outlook and Future Indicators
Looking ahead, market participants will be closely monitoring several key economic indicators. Siddhartha Khemka, Head of Research for Wealth Management at Motilal Oswal Financial Services, highlighted that markets will track the S&P Manufacturing PMI data released late on Monday, followed by the US JOLTS job openings data scheduled for Tuesday.
The combination of the US-India trade deal breakthrough and positive domestic market performance suggests that Indian financial markets may be entering a period of sustained upward momentum, potentially benefiting from improved international trade relations and growing investor confidence in the economy's prospects.
