Indian Markets Surge 5% in Biggest Jump in Five Years After US Trade Deal
Nifty approaches record highs; Reliance leads gains as rupee strengthens past 90 per dollar
Indian shares surged on Tuesday with benchmark indices logging their biggest intraday jump in five years, as the India-US trade deal removed a key market overhang that had triggered sustained foreign outflows over the past year.
Both the Nifty and Sensex rose about 5% at the open, with the Nifty coming within 50 points of record-high levels. Forty-six of the Nifty 50 constituents advanced as all 16 major sectors logged gains.
Reliance Leads Market Rally
Index heavyweight Reliance Industries jumped 4%, becoming the top gainer on both benchmarks. The broader small-cap and mid-cap indices surged 3% each, reflecting widespread market optimism.
Export-oriented sectors including auto ancillaries, textiles, apparels, seafood, engineering goods, and specialty chemicals posted strong gains following the tariff reduction announcement.
Rupee Strengthens Sharply
The rupee strengthened more than 1% to 90.34 per dollar in early trade, as expectations grew that the deal would attract foreign fund inflows toward Indian assets after a prolonged period of capital flight.
Foreign Outflow Concerns Ease
Foreign portfolio investors had offloaded shares worth $23 billion since the start of 2025, triggering rare underperformance compared to Asian and emerging market peers. Analysts cite the delayed trade deal, limited AI exposure, and muted earnings as key drivers of the selling.
"Tariffs on Indian goods contributed to rupee depreciation, leading to foreign investors withdrawing capital," said Peeyush Mittal of Matthews Asia. "Now the trade deal breaks this loop, fostering stability for the rupee and encouraging foreign investors to evaluate Indian equities more objectively."
Enhanced Earnings Visibility
"For equity markets, the trade deal enhances earnings visibility, supports valuation re-rating particularly for export-oriented and capex-linked sectors, and reinforces India's positioning as a relatively safe haven among emerging markets," said Uttam Kumar Srimal of Axis Direct.