Benchmark indices rallied strongly on Tuesday morning as markets reacted positively to the long-pending India–US trade deal, which removed a major overhang on investor sentiment. The Sensex surged more than 2,200 points while the Nifty rose close to 3% in early trade, with buying seen across largecap, midcap and smallcap stocks.

Investors welcomed clarity after months of uncertainty, as the agreement cut US tariffs on Indian goods from earlier punitive levels to 18%. Market strategists described the announcement as a game changer for Indian equities, with positive spillovers expected across growth, corporate earnings and currency markets.

Experts estimate that stronger exports could lift India’s GDP growth to around 7.5% in FY27, while corporate earnings growth may accelerate to 16–18%. The rupee is also expected to strengthen as foreign portfolio investors return, aided by the removal of tariff-linked uncertainties.

The rally was further amplified by aggressive short covering, as markets had been heavily positioned for downside ahead of the announcement. Banking, NBFCs, IT, telecom, capital goods and textile stocks are expected to lead gains, with labour-intensive sectors such as textiles, gems and jewellery and engineering goods emerging as key beneficiaries.

The deal also places India in a more competitive position compared to several Asian export economies, reinforcing investor confidence. Along with a growth-focused Union Budget 2026, the trade agreement has improved the macro outlook, raising expectations of a more sustained uptrend in Indian equity markets.