The 18% Pivot: Why the India-US Trade Deal is a Game-Changer for Dalal Street

~Sumon Mûkhöpadhuæy.

The recent breakthrough in India-US trade relations has sent shockwaves through global markets, with the GIFT Nifty exploding by nearly 800 points in overnight trading. This dramatic surge follows the announcement of a significant trade agreement between the United States and India, effective immediately, which slashes US reciprocal tariffs on Indian goods from 25% to 18%.

In return, India has committed to reducing tariffs and non-tariff barriers on US products to zero, alongside a pledge to cease purchases of Russian oil and ramp up imports from the US (and potentially Venezuela), including over $500 billion in energy, technology, agricultural, coal, and other goods.

Diplomacy via Social Media: Trump and Modi Confirm

Announced via social media posts by US President Donald Trump on Truth Social and confirmed by Prime Minister Narendra Modi on X, the deal stems from a direct phone conversation between the two leaders. Trump described Modi as "one of my greatest friends," emphasizing mutual respect and the potential to strengthen bilateral ties. Modi expressed delight at the reduced tariffs on "Made in India" products, highlighting opportunities for mutually beneficial cooperation between the world's largest democracies.

"This agreement resolves months of trade friction... The tariff relief eliminates a key overhang that had pressured Indian equities and seen the Nifty decline over 1,000 points in recent periods."

Market Reaction: A Robust Gap-Up

The market reaction was swift and emphatic. GIFT Nifty jumped sharply to signal a robust gap-up for Tuesday, February 3, 2026. Trading screens showed peaks around 25,962 before some consolidation, pointing to a potential 2.5–3% higher open for the benchmark indices. This optimism extends to ADRs of major Indian firms like Infosys and Wipro, which saw positive movements in US trading.

Sectoral Winners: The Heat Map

Sector	Primary Benefit	Stocks to Watch
Textiles & Apparel	Lower duties enhance pricing power.	Kitex, Pearl Global, KPR Mill, Welspun
Gems & Jewellery	Restored confidence among US buyers.	Rajesh Exports, Goldiam International
IT Services	Broader trade optimism; ADR surge.	TCS, Infosys, HCLTech, Wipro
Auto & Engineering	Improved global sentiment & margins.	Bharat Forge, Balkrishna Ind, JK Tyre
Seafood	Eased market access.	Avanti Feeds, Apex Frozen, Coastal Corp

While the deal marks a positive step, the sustainability of gains will hinge on execution and earnings momentum. For now, it ushers in a renewed sense of optimism for Indian markets, underscoring the power of strategic diplomacy.

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