'From headwinds to tailwinds': India-US trade deal lifts stocks, rupee

Indian equity benchmarks rallied sharply in Tuesday's trade after an India-US trade deal slashed reciprocal tariffs on Indian goods to 18 per cent from 25 per cent, easing a key overhang on domestic equities and the currency.

NSE Nifty and BSE Sensex were up nearly 3 per cent each, while the Indian rupee climbed over 1 per cent to 90.40 per dollar in early trade. 

Market expert Arun Kejriwal said the India-US trade deal would be a major positive for equities as well as the 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 told Business Today.

Kejriwal added that earnings performance will now play a bigger role in stock selection.

"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 said.

The positive momentum was also visible in the broader market, with mid-cap and small-cap indices trading higher, gaining around 3 per cent, respectively.

The reduction in reciprocal tariffs has also boosted global risk appetite.