Markets Explode as India-US Tariff Cut Sparks Broad-Based Rally

Dalal Street didn’t just open higher on Tuesday. It exploded.

Indian equity markets staged a historic opening rally after the announcement of the long-awaited India-US trade deal, sending benchmark indices soaring and triggering a broad-based surge across sectors and market capitalisations.

The Nifty 50 jumped 4.8%, or nearly 1,220 points, to open above 26,300, while the Sensex surged over 3,650 points, or 4.5%, crossing 85,300 at the opening bell. It was one of the strongest gap-up openings in recent years, reflecting a sudden and decisive shift in investor sentiment.

The catalyst was clear: the US decision to cut tariffs on Indian goods sharply—from 50% to 18%—a move markets immediately read as a game changer for exports, growth and capital flows.

“This is a game changer for the Indian economy and stock markets,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. He said the trade deal could lift India’s growth rate to around 7.5% in FY27, accelerate corporate earnings growth to 16–18%, and lead to a sharp appreciation of the rupee.

According to Vijayakumar, the rally is being powered by a rare convergence of positives: the India-US trade deal, the EU-India trade agreement, and a growth-oriented Union Budget. “Together, they will revive animal spirits in the economy,” he said, adding that markets—already heavily short—are now witnessing aggressive short-covering, amplifying the upside.

Rally broadens across sectors and stocks

The surge wasn’t confined to the benchmarks.

In the broader market, the Nifty 100 rose nearly 4%, while midcap and smallcap indices jumped over 4%, signalling widespread participation. Sectorally, IT stocks led the charge, with the Nifty IT index jumping nearly 6%, followed by strong gains in auto, metals, pharma, consumer durables and capital goods.

Banking heavyweights, non-banking financial companies, and blue-chip names in telecom and infrastructure also rallied sharply, aided by expectations of renewed foreign institutional investor (FII) inflows.

Textile stocks, seen as direct beneficiaries of improved US market access, came into sharp focus as well.

Markets look past Budget volatility

Market participants said the external trigger helped investors look beyond the turbulence caused by the Union Budget 2026–27, which had rattled markets last week after an unexpected hike in securities transaction tax (STT) on derivatives.

“The tariff reduction has significantly lifted global risk sentiment,” said Ponmudi R, CEO of Enrich Money, noting that GIFT Nifty had already signalled a sharp gap-up overnight. “This positive trigger is helping markets move past post-Budget volatility.”

The rally was reinforced by strong global cues. Asian markets opened firmly in the green, with Japan’s Nikkei surging over 3%, South Korea’s KOSPI jumping 4%, and gains across Taiwan and Singapore, even as Hong Kong lagged slightly.

Commodities reflected the risk-on mood. Gold prices rose around 2% on MCX, while silver surged nearly 6%, underscoring heightened trading activity across asset classes.

The scale and speed of the rally suggest more than a knee-jerk reaction. For investors, the tariff cut has reset the narrative, strengthening India’s export outlook, improving macro stability, and reviving confidence that had been shaken by policy and global uncertainties.

Whether the rally sustains will depend on follow-through on earnings, fund flows and execution. But for now, Dalal Street has made its verdict clear.

(With inputs from ANI)