India-US Trade Deal: 800-point GIFT Nifty gain sets tone for strong Tuesday opening; 20 stocks in focus

A sharp rise in GIFT Nifty paved the way for a strong opening on Dalal Street on Tuesday after India and the US announced a long-awaited trade deal, allaying tariff concerns that had weighed on Indian markets for months. GIFT Nifty rose nearly 800 points before easing a bit, signaling a broad-based relief rally. The move comes after US President Donald Trump said the US would cut reciprocal tariffs on India to 18%, down from previous levels, while India would also take steps to reduce tariffs and non-tariff barriers on US goods.For markets, the announcement removes a major overhang that had kept foreign investors cautious and Indian stocks underperforming for a long time. Indian markets had struggled in January, with the Nifty losing more than 1,000 points at its worst and foreign portfolio investors selling billions of dollars worth of stocks.

Trade uncertainty, a weakening rupee and continued global risk sentiment had made Indian equities among the weaker performers among major markets. Analysts had repeatedly said that any breakthrough on the trade front between India and the US could act as a trigger for a reversal.

How markets may react after the India-US trade deal

Sonam Srivastava, founder and fund manager at Wright Research PMS, said the reduction in rates from 25% to 18% is a meaningful positive for Indian equities from both a sentiment and an earnings perspective. “The sharp rise in GIFT Nifty reflects an immediate repricing of risks, driven by expectations of better trade competitiveness, lower costs for exporters and stronger alignment between the two economies,” Srivastava said.

She added that export-oriented sectors are likely to see better order inflows and margin stability over time, although the sustainability of the rally will depend on how earnings improvements develop.

Garima Kapoor, deputy head of research and economist at Elara Capital, said the 18% rate brings India closer to peer economies facing similar rates. She pointed out that India could get a favorable tariff differential if penalties linked to Russian oil are also removed. According to her, the direction of the deal is clearly positive and supportive for Indian assets, even if all tariffs have not yet been completely removed.

Trideep Bhattacharya, president and CIO for equities at Edelweiss Mutual Fund, said the rate cut has far exceeded consensus expectations. Combined with the recently concluded trade deal between India and the EU, he believes this could be one of the strongest external growth drivers for the Indian economy in 2026. For the broader market, the immediate reaction is expected to be a gap-up opening, with exporters and globally connected stocks likely to take the lead. Analysts say the deal removes a key uncertainty that had hurt sentiment, especially among foreign investors. While short-term volatility following a sharp move cannot be ruled out, the trade deal strengthens the medium-term outlook by improving earnings visibility and easing pressure on the rupee.Export-oriented sectors that were hit hard when tariff fears escalated are now back in the spotlight. Textiles and apparel stocks are expected to see renewed interest after previous sharp corrections. Companies such as Kitex Garments, Pearl Global, KPR Mill, Bombay Dyeing and Indo Count were under pressure as higher tariffs threatened their competitive position. Companies with heavy exposure to the US, including Welspun Living, Gokaldas Exports and Trident, are also likely to benefit from greater access to the US market.

Gems and jewelery exporters are another major beneficiary. Goldiam International, which derives much of its revenue from the US, was particularly vulnerable to tariff risks. Colin Shah, Managing Director of Kama Jewelry, said the easing of reciprocal tariffs comes as a relief to the industry, restoring confidence among both exporters and buyers in the US market.

Seafood exporters are also in the spotlight after coming under pressure in recent months. Stocks such as Avanti Feeds, Apex Frozen Foods and Coastal Corporation were under pressure due to concerns about demand and prices. Lower rates can help stabilize volumes and margins for these companies.

Auto accessories and machinery exporters are also expected to see renewed interest. Bharat Forge, which has significant exposure to the US market, Ramkrishna Forgings with its North American order book, and Balkrishna Industries, which sources a significant portion of tire volumes from the US, are all stocks to watch. JK Tire is also in the spotlight, given concerns about potential spillover effects on its Mexican operations that export to the US.

Information technology stocks are also likely to respond positively as the US remains their largest market. TCS, Infosys, HCL Technologies and Wipro are among the stocks that could benefit from higher macro confidence and reduced trade friction, even though IT services are not directly subject to commodity tariffs.

Market experts warn that while the initial reaction is likely to be strong, the follow-up will depend on technical levels and global signals. Analysts note that the Nifty is facing resistance near key moving averages and a decisive move above these levels would confirm a near-term trend reversal. Cooling volatility and stabilizing foreign flows would further support the rally.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)