A guard walks previous the Nationwide Inventory Change constructing in Mumbai, India, on February 9, 2018.
Danish Siddiqui | Reuters
India’s benchmark Nifty 50 inventory index rose 5% on open Tuesday, after New Delhi and Washington introduced a long-awaited commerce deal that noticed a pointy lower in U.S. tariffs on Indian exports.
U.S. President Donald Trump on Monday stateside mentioned that U.S. will lower reciprocal tariff on India to 18% from 25%. He added that India will cut back its tariff and non-tariff limitations towards the U.S. to zero.
The U.S. had levied 50% tariffs on India, together with a 25% obligation for buying Russian oil, however Trump’s announcement solely talked about reducing “reciprocal” tariffs inflicting some confusion. Reuters, nevertheless, reported citing sources that the general tariff had been lowered to 18%.
Trump mentioned that in his name with Indian Prime Minister Narendra Modi, India agreed to cease shopping for Russian oil and as an alternative “purchase way more” from U.S.
Modi, in his put up on X, mentioned that “made in India” merchandise will now face lowered tariffs of 18% within the U.S. whereas extending help for U.S. president’s efforts to usher international peace, stability and prosperity.
Originally of 2025, India was anticipated to be among the many first international locations to signal an settlement with the U.S. and the shortage of an “express deal” created a “rift between India’s sturdy macros and the weak efficiency of various asset courses,” Citi Analysis mentioned in its report on Tuesday.
The discount in tariffs has are available in “materially higher than consensus expectations,” mentioned Trideep Bhattacharya, president, equities, at Edelweiss Asset Administration.
“When mixed with the not too long ago concluded India–EU commerce settlement, this probably represents one of many strongest exterior progress stimuli for the Indian financial system in 2026,” she added.
The Nifty pared some positive factors and was final buying and selling about 4% greater, placing it on track for its finest day in almost six years, if positive factors maintain.
Indian fairness market was among the many weakest performers in rising international locations as overseas traders exited in file numbers, with the Nifty gaining somewhat over 10%.
In greenback phrases, given the decline within the rupee, markets underperformed much more. The MSCI India index [dollar] gained simply 4.29% in 2025 as in comparison with MSCI Rising Markets index that rose 33.57%.
The rupee was Asia’s worst performing foreign money in 2025, harm by the absence of a commerce cope with the U.S., India’s largest export market and chronic outflows in overseas funds.
Following the announcement of the deal, the Rupee strengthened 1% and was final buying and selling at 90.29 per greenback.
“This breakthrough is unequivocally optimistic” for exports, sentiments and monetary markets, Radhika Rao, senior economist and govt director at DBS Banks mentioned, including that “home markets are anticipated to witness a aid rally,” as excessive tariffs had been a key drag on sentiment up to now quarter.
