Stock Market Today: The Indian stock market logged its best single-day rally in nine months after India signed a historic trade deal with the US on Feb. 2. Indian equities rose driven by heavyweight financials, while export-oriented stocks powered a broader rally after the India-US trade deal removed a key overhang for the domestic market.
Notably, investors' wealth swelled by nearly Rs 12 lakh crore on the bullish sentiment. All 16 major sectors logged gains, while the broader small-caps and mid-caps jumped 2.8% each. Forty-six of the Nifty 50 constituents advanced. Top private lenders HDFC Bank and ICICI Bank rose 2.2% and 2.7%, leading the benchmark rally. The rupee strengthened against the dollar, posting its best day in seven years on expectations that the deal will lure foreign fund inflows towards Indian assets after sustained outflows over the last year.
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The rupee strengthened 1.4% to close at 90.27 per dollar, according to Bloomberg data. Intraday, the local currency surged as much as 1.6% to 90.05, becoming the best performing unit in Asia. The deal will open the door for modest appreciation in rupee, but the pace and extent will depend on RBI intervention thresholds, given the priority of maintaining export competitiveness, according to analysts. Some said foreign inflows may improve at the margin, though a sharp shift is unlikely as global investors remain focused on artificial intelligence, quantum computing, and data-center themes.
Market investors are tracking the trade deal between India and the United States that lowers reciprocal tariffs on Indian imports to 18% from 25%. The change takes effect immediately. India had earlier faced total tariffs of 50%, including a 25% penalty linked to buying Russian oil. The US Embassy confirmed the overall tariff rate is now 18%.
Notably, the two sides have been locked in negotiations since early 2025, but the talks derailed after the US slapped tariffs as high as 50% on Indian imports in August. After a brief pause, the negotiations resumed in October, but the two countries could not reach the finish line. The Indian stock market joined the euphoria around better trade flows between the two large economies. The delay in the India-US trade deal, lack of exposure to emerging themes such as artificial intelligence and muted earnings were the key reasons for the foreign selling in Indian stocks, since the start of 2025.
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