Sensex ends near 78,000, Nifty tops 25,700 on India–US trade breakthrough
CHENNAI: Indian equity markets staged a powerful rebound on Tuesday, February 3, with benchmark indices posting their strongest single-day gains in months as investors cheered a breakthrough trade agreement between India and the United States and returned aggressively to risk assets. At the close, the BSE Sensex was up about 2,070 points, while the Nifty 50 gained nearly 620 points to settle above the 25,700 mark. The rally was broad-based, extending across large-, mid- and small-cap stocks, and marked a sharp turnaround from the weakness and volatility seen in recent sessions.
The primary catalyst for the surge was the announcement of a comprehensive India–US trade deal that is expected to significantly lower tariff barriers and improve market access for Indian exporters. The agreement has been interpreted by investors as a meaningful step toward strengthening bilateral economic ties and improving India’s position in global supply chains. Export-oriented sectors such as auto components, engineering goods, textiles, metals and information technology attracted heavy buying, while heavyweight stocks in banking, energy and infrastructure also contributed materially to index gains.
Markets opened with a strong gap-up and maintained positive momentum through most of the session, supported by sustained institutional buying and short-covering. Banking and financial stocks rallied on expectations that stronger external demand and a firmer growth outlook would translate into healthier credit growth and improved asset quality. Capital goods and infrastructure shares benefited from optimism around manufacturing-led expansion and continued public investment. Even defensives such as FMCG and pharmaceuticals saw steady inflows, underscoring the breadth of the advance.
The rally in equities was accompanied by a sharp appreciation in the Indian rupee, which strengthened against the US dollar as confidence in India’s external position improved. Bond yields eased modestly, reflecting expectations that improved trade prospects and capital inflows could help contain inflationary pressures and support macro stability. Together, the moves in currency and fixed income markets reinforced the positive signal coming from equities.
Tuesday’s strong close also represented a sentiment reset after markets had been under pressure in recent days following Budget-related concerns and apprehensions around potential tax and regulatory changes. Those worries had triggered profit-taking and heightened volatility, particularly in derivative-heavy segments. The trade deal announcement helped shift focus back to India’s medium-term growth story and its attractiveness as an investment destination, especially at a time when global investors are selectively reallocating capital toward faster-growing economies.
Looking ahead, market participants will watch closely for confirmation of sustained foreign institutional inflows, follow-through buying in export-oriented sectors, and cues from upcoming corporate earnings. While near-term technical indicators suggest the possibility of some consolidation after the sharp run-up, the overall tone has turned decisively constructive. If supportive global cues and positive domestic data continue, Tuesday’s rally could mark the beginning of a broader recovery phase for Indian equities rather than a one-day relief bounce.