Indian shares experienced a significant surge on Tuesday, with the benchmark Nifty index nearing record-high levels, driven by strong performances from Reliance and export-oriented stocks. This boost followed the announcement of a trade deal between India and the U.S. that alleviated a key market concern.
At the market’s opening, both benchmarks saw approximately a 5% increase, marking their largest intra-day jump in five years. By 9:41 a.m. IST, the Nifty 50 had risen by 2.81% to 25,799.5, while the BSE Sensex climbed 2.83% to 83,977.92.
U.S. President Donald Trump revealed on Monday that the trade agreement with India would reduce U.S. tariffs on Indian goods from 50% to 18%. In return, India agreed to cease purchasing Russian oil and to lower certain trade barriers.
All 16 major sectors showed gains, with broader small-cap and mid-cap indices each jumping by 3%. Among the Nifty 50 constituents, 46 stocks advanced.
Reliance Industries, a heavyweight in the index, saw a 4% increase, making it the top performer across both indices.
The Indian rupee appreciated by more than 1% to 90.34 per dollar in early trading, driven by expectations that the trade deal would attract foreign investment into Indian markets after a year of consistent outflows.
According to Uttam Kumar Srimal, deputy head of fundamental research at Axis Direct, “For equity markets, the trade deal enhances earnings visibility, supports valuation re-rating, particularly for export-oriented and capex-linked sectors, and reinforces India’s positioning as a relatively safe haven among emerging markets.”
Components of export-oriented sectors such as auto ancillaries, textiles, apparels, seafood, engineering goods, and specialty chemicals surged earlier in the day following the trade agreement. Analysts anticipate that the trade deal will also ease concerns over foreign capital outflows.
The delay in finalizing the India-U.S. trade deal, coupled with India’s lack of exposure to emerging themes like artificial intelligence and subdued earnings, were major factors behind foreign investors selling Indian stocks since early 2025. Foreign portfolio investors have sold shares worth $23 billion since the beginning of 2025, leading to a rare underperformance compared to other Asian and emerging market peers.
Peeyush Mittal, a portfolio manager at Matthews Asia, noted that the tariffs on Indian goods contributed to the rupee’s depreciation, prompting foreign investors to withdraw funds from India. “Now the trade deal breaks this loop, fostering stability for the rupee and encouraging foreign investors to evaluate Indian equities more objectively,” Mittal stated.
