Sensex, Nifty roar back with 2.5% surge as India-US trade deal brightens outlook for markets, rupee
The broader market outperformed the benchmarks, with the Nifty Midcap and Smallcap indices climbing 2.84 per cent and 2.82 per cent, respectively, reflecting a decisive improvement in risk appetite.
- Feb 3, 2026,
- Updated Feb 3, 2026 4:57 PM IST
Domestic benchmarks continued their sharp upmove on Tuesday, shrugging off the Budget-day selloff as the India-US trade deal -- cutting reciprocal tariffs on Indian goods to 18 per cent from 25 per cent -- removed a key uncertainty weighing on domestic equities and the rupee.
The 30-share BSE Sensex surged 2,072.67 points or 2.54 per cent to close at 83,739.13. NSE Nifty50 rallied 639.15 points or 2.55 per cent to settle at 25,727.55. The broader market outperformed the benchmarks, with the Nifty Midcap and Smallcap indices climbing 2.84 per cent and 2.82 per cent, respectively, reflecting a decisive improvement in risk appetite.
Some market experts attributed the rally to easing global trade concerns following the tariff cut, along with expectations that the pressure on the Indian rupee could abate further going forward.
"The reduction of US tariffs on Indian goods from 50 per cent to 18 per cent enhances India's competitive position among emerging markets and bolsters the outlook for export-oriented sectors with high US exposure, such as textiles, aquaculture, gems and pharmaceuticals, which were supported in the 2026 Union Budget. Overall market sentiment has turned decisively positive, with global trade risks easing and a moderation in the US-Iran conflict. Going forward, the markets could focus more on the ongoing Q3 corporate results with a positive bias, which till date have been below estimates, because of potential future earnings upgrades led by a reduction in tariff risk," said Vinod Nair, Head of Research at Geojit Investments.
Market veteran Arun Kejriwal said the long-pending trade agreement has shifted the narrative for both equities and the domestic currency.
"From headwinds, we are now talking of tailwinds. The biggest selling pressure on the rupee was the fact that the trade (India-US) deal was just not happening. I believe that the depreciation of the rupee will also stop, and we would seek lower levels with the domestic currency improving. Don't expect it to jump 1 or 2 per cent every other day. It will be a slow climb, but the depreciation part is now out of the way," he stated.
Kejriwal added that with macro uncertainties easing, earnings delivery will become critical for stock performance. "Looking ahead, it's reasonable to expect the stock market to reward companies that report strong results, while underperformers will continue to feel the pressure," he stated.
Ponmudi R, CEO of Enrich Money, noted that market breadth turned firmly positive, driven by export-oriented and commodity-linked sectors. "The market breadth turned decisively positive, led by export-oriented and commodity-linked sectors such as textiles, chemicals, and auto ancillaries, while financials, realty, pharma and IT stocks also participated in the upmove," he said.
"Mid- and small-cap stocks joined the rally on strong risk-on sentiment and short-covering activity," Ponmudi added.
"The rupee strengthened alongside equities, reflecting improved external confidence and easing trade-related concerns. Overall sentiment turned firmly constructive, though near-term sustainability will hinge on global macro cues, execution of the trade agreement, and the pace of revival in foreign capital flows," Ponmudi further stated.
Domestic benchmarks continued their sharp upmove on Tuesday, shrugging off the Budget-day selloff as the India-US trade deal -- cutting reciprocal tariffs on Indian goods to 18 per cent from 25 per cent -- removed a key uncertainty weighing on domestic equities and the rupee.
The 30-share BSE Sensex surged 2,072.67 points or 2.54 per cent to close at 83,739.13. NSE Nifty50 rallied 639.15 points or 2.55 per cent to settle at 25,727.55. The broader market outperformed the benchmarks, with the Nifty Midcap and Smallcap indices climbing 2.84 per cent and 2.82 per cent, respectively, reflecting a decisive improvement in risk appetite.
Some market experts attributed the rally to easing global trade concerns following the tariff cut, along with expectations that the pressure on the Indian rupee could abate further going forward.
"The reduction of US tariffs on Indian goods from 50 per cent to 18 per cent enhances India's competitive position among emerging markets and bolsters the outlook for export-oriented sectors with high US exposure, such as textiles, aquaculture, gems and pharmaceuticals, which were supported in the 2026 Union Budget. Overall market sentiment has turned decisively positive, with global trade risks easing and a moderation in the US-Iran conflict. Going forward, the markets could focus more on the ongoing Q3 corporate results with a positive bias, which till date have been below estimates, because of potential future earnings upgrades led by a reduction in tariff risk," said Vinod Nair, Head of Research at Geojit Investments.
Market veteran Arun Kejriwal said the long-pending trade agreement has shifted the narrative for both equities and the domestic currency.
"From headwinds, we are now talking of tailwinds. The biggest selling pressure on the rupee was the fact that the trade (India-US) deal was just not happening. I believe that the depreciation of the rupee will also stop, and we would seek lower levels with the domestic currency improving. Don't expect it to jump 1 or 2 per cent every other day. It will be a slow climb, but the depreciation part is now out of the way," he stated.
Kejriwal added that with macro uncertainties easing, earnings delivery will become critical for stock performance. "Looking ahead, it's reasonable to expect the stock market to reward companies that report strong results, while underperformers will continue to feel the pressure," he stated.
Ponmudi R, CEO of Enrich Money, noted that market breadth turned firmly positive, driven by export-oriented and commodity-linked sectors. "The market breadth turned decisively positive, led by export-oriented and commodity-linked sectors such as textiles, chemicals, and auto ancillaries, while financials, realty, pharma and IT stocks also participated in the upmove," he said.
"Mid- and small-cap stocks joined the rally on strong risk-on sentiment and short-covering activity," Ponmudi added.
"The rupee strengthened alongside equities, reflecting improved external confidence and easing trade-related concerns. Overall sentiment turned firmly constructive, though near-term sustainability will hinge on global macro cues, execution of the trade agreement, and the pace of revival in foreign capital flows," Ponmudi further stated.