Indian stock markets rallied sharply after the India–US trade agreement, with Sensex and Nifty posting one of their biggest gains in years. The deal boosted investor confidence, strengthened the rupee, improved export prospects, and raised growth expectations across key sectors.

New Delhi: Indian stock markets saw a historic rally on February 3, 2026, as investors reacted positively to the newly announced India–US trade deal. Both Sensex and Nifty opened sharply higher, marking one of the strongest gap-up openings seen in many years. The surge followed comments from US President Donald Trump, who announced a major reduction in tariffs on Indian goods. This rally also helped markets recover from the recent fall caused by the Union Budget.

The strong market reaction came amid high investor interest, rising foreign fund inflows, and growing confidence in India’s economic outlook. Searches related to the India–US trade deal, Sensex jump, and rupee strength surged as markets responded to the news.

What Is the India–US Trade Deal?

US President Donald Trump announced the long-awaited trade agreement on February 2, 2026, after speaking with Prime Minister Narendra Modi. Trump described the agreement as a “win-win” deal that would strengthen economic relations between the two countries.

Under the agreement, the US reduced tariffs on Indian goods to 18% from 25%. In some cases, tariffs were reportedly cut from as high as 50%, ending penalties that were linked to India’s purchase of Russian oil. In return, India agreed to stop buying Russian oil, lower trade barriers, and increase imports from the US by $500 billion.

The deal came into effect immediately and removed months of uncertainty caused by repeated US tariff threats on Indian exports. Since nearly 20% of India’s exports go to the US, analysts believe the deal could lift India’s GDP growth to 7.5% in FY27, raise corporate earnings growth to 16–18%, and reduce policy-related risks for investors. Many experts have called the deal a major turning point for India’s economy.

Sensex and Nifty Performance on February 3, 2026

Markets opened with massive gains as investors reacted with optimism. The Sensex jumped over 3,600 points at the opening, reaching around 85,314, and later touched an intraday high of 85,871, rising nearly 4,200 points at its peak. During the session, it traded around the 83,970–84,000 range, still showing strong gains.

The Nifty also saw a powerful opening, rising about 1,220 points to 26,308. It crossed the 26,300 level during the day and traded in the range of 25,800–25,811. The rally was broad-based, with strong buying seen across sectors.

Stocks in financial services, energy, and technology led the gains. Adani Ports rose around 5%, Bajaj Finance gained 4%, Reliance Industries climbed 3.5%, Infosys rose 3%, and HDFC Bank and ICICI Bank gained 2–3%. The GIFT Nifty had already jumped sharply overnight, clearly signaling a strong opening for domestic markets.

This rally fully reversed the sharp fall seen on February 1, when markets crashed after the Union Budget. That day, the Sensex had fallen 1,546 points and the Nifty had dropped 495 points. The February 3 rally is now counted among the biggest single-day gains in recent market history.

Rupee Strength and Bond Market Reaction

The Indian rupee recorded its biggest gain in more than three years after the trade deal announcement. It strengthened by about 1.2%, gaining ₹1.10–1.20, and moved to around ₹90.40–90.46 per US dollar. This was a sharp improvement from its previous close near ₹91.50 per dollar.

The bond market also reacted positively. The 10-year government bond yield fell by 5 basis points to 6.71%, showing lower inflation concerns and expectations of easier interest rates. Experts believe the stronger rupee will attract more foreign investment, help build forex reserves, reduce import costs, and bring stability to the currency market.

Impact on Sectors and Broader Markets

India-focused ETFs listed in the US rose sharply overnight, showing strong global confidence in Indian assets. Export-oriented sectors benefited the most from the trade deal.

IT companies like Infosys and TCS gained 3–4% due to their strong exposure to the US market. Pharma stocks, including Sun Pharma, rose around 3%. Engineering companies like L&T climbed nearly 4%, while textile exporters such as Gokaldas Exports and Welspun Living gained 5–7%, supported by better export prospects.

Overall, the deal improved sentiment across the market, reversed the recent Budget-day losses, and raised expectations of new record highs if foreign investment continues.

What Experts Are Saying

Market experts and analysts have widely praised the trade deal. Dr. VK Vijayakumar of Geojit Financial Services called it a game changer for India’s economy and stock markets. He said growth could rise to 7.5% in FY27, corporate earnings could grow 16–18%, and the rupee could strengthen sharply.

Emkay Global said the deal should lead to strong foreign portfolio investor buying, supported by reasonable valuations and improving earnings. Nuvama Institutional Equities highlighted that a stronger rupee would attract more foreign inflows and boost markets further.

Analysts from Bank of America and Citi said the agreement removes major policy uncertainty, supports the rupee, and reduces pressure on domestic interest rates. Sachin Sawrikar of Artha Bharat Investment Managers said the deal strengthens one of the most important global economic partnerships and supports export-driven sectors. Deepak Agrawal of Kotak Mahindra AMC added that the deal provides major relief to stressed markets and supports rallies in the rupee and short-term interest rates.

Historical Context and Outlook

The agreement ends long-standing tariff disputes, including US duties of 25–50% on Indian goods linked to Russian oil imports. The rally on February 3 stands out as one of the strongest market gap-ups in years, coming just days after a sharp Budget-day fall.

In the past, similar global trade agreements have led to 5–10% market gains over the following three months. With investor confidence returning and foreign inflows expected to rise, experts believe this deal could push Indian markets to new record highs in the coming months.