Feb 3 (Reuters) – Indian shares jumped to post their best day in nine months on Tuesday, led by Reliance and heavyweight financials, while export-oriented stocks powered a broad rally after the India–U.S. trade deal removed a key market overhang.
Both benchmarks surged about 5% in early trade. At close, the Nifty 50 settled 2.55% higher at 25,727.55 points, while the BSE Sensex gained 2.54% to 83,739.13, to log their strongest single-session rise since May 2025.
U.S. President Donald Trump on Monday announced a trade deal with India that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for New Delhi halting Russian oil purchases and lowering trade barriers.
All 16 major sectors logged gains, while the broader small-caps and mid-caps jumped 2.8% each. Forty-six of the Nifty 50 constituents advanced.
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Index heavyweight Reliance Industries jumped 3.4%. Top private lenders HDFC Bank and ICICI Bank rose 2.2% and 2.7%, leading the benchmark rally.
The rupee strengthened against the dollar, posting its best day in seven years on expectations that the deal will lure foreign fund inflows towards Indian assets after sustained outflows over the last year.
“Higher tariffs on Indian goods had raised a balance-of-payments risk, contributing to rupee depreciation and triggering foreign outflows in a self-feeding cycle,” said Peeyush Mittal, portfolio manager at Matthews Asia, adding that the trade deal breaks the loop and will lend stability to rupee and stocks.
The delay in the India-U.S. trade deal, lack of exposure to emerging themes such as artificial intelligence and muted earnings were the key reasons for the foreign selling in Indian stocks, since the start of 2025.
Foreign portfolio investors have offloaded shares worth about $23 billion since the start of 2025, triggering a rare underperformance compared with Asian and emerging market peers.
“The trade deal announcement does change the immediate outlook on India and sets a positive tone, which is good for equities in the short to medium term,” said Vineet Arora, managing director at NAV Capital Emerging Star fund, a Singapore-based foreign investor.
Export-linked sectors such as auto ancillaries, textiles, apparel, jewellery, IT, pharma, seafood, engineering goods, renewables, speciality chemicals, electronics manufacturers will find their flavour again, Arora said.
On the day, all the export-linked sectors surged.
Eternal gained 2.6% on inclusion into Jefferies’ model India portfolio, with the brokerage terming it a “FPI favourite”. Adani Ports climbed 9.1% on raising the upper end of its core earnings forecast for the current fiscal.