The domestic benchmark indices, Sensex and Nifty 50, rose on Thursday due to increasing optimism regarding the US-India trade agreement. New inflows of foreign funds and purchases of IT shares also propelled the markets upward in the trading session.
On Thursday, the Nifty 50 was only 0.7% away from its peak, having reached an intraday high of 26,099.70. The Sensex climbed to as high as 85,272.40, which is approximately 0.8% less than its historic maximum. The Nifty 50 achieved a record high of 26,277.35 in September of the previous year, while the Sensex reached its highest point at 85,978.25 around the same period.
Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities believes that the Indian markets have already begun responding positively to the anticipation of a potential India–US trade deal expected in the coming days or weeks.
Several reports suggest that tariffs on Indian exports to the US could be reduced sharply from nearly 50% to around 15–16%. If this materializes, it could trigger a strong sentimental boost, leading to a gap-up opening in the Nifty 50, particularly benefiting IT and export-oriented sectors.
Combined with improving corporate earnings, this could set the stage for a medium-term move toward the ~27,000–28,000 range over the next 3–6 months, according to Tapse.
What does the trade deal mean for India?
This India–US deal marks more than just the end of a long, bruising negotiation cycle it signals India’s arrival as an equal at the global economic table, believes Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund.
For months, markets have worn the uncertainty like a wet blanket — currency weakness, trade friction, and valuation fatigue. Yet India held its ground, refused short-term concessions, and emerged with a framework that rebalances trade rather than bending to it.
According to Mohit, from a market lens, this deal could catalyse a structural rerating. It brings relief to sectors long priced for geopolitical drag — autos, capital goods, and PSUs in particular — while reinforcing foreign investor confidence in India’s policy stability. The rupee’s resilience through this phase is already hinting at that shift.
As we look ahead, the narrative is turning from defence to dominance. The India story now has tailwinds not just from domestic growth, but from geopolitical credibility. If policy execution stays steady, this could be the inflection point that transforms India from the market that reacts — to the market that sets the tone.
Other factors contributing to the recent stock market rally
In addition to the India-US trade agreement, various other elements have played a role in the recent surge of the stock market in India.
The country’s GDP growth has remained robust, bolstered by strong consumer spending, investment, and government policy support. An increase in foreign institutional investment (FII), driven by India’s stable macroeconomic conditions, enhanced corporate governance, and the inclusion of Indian bonds in global indices, has contributed to the market rally.
Moreover, better-than-expected quarterly performances from major corporations, particularly in the banking, IT, and FMCG sectors, have resulted in upward adjustments in earnings forecasts and shifts in investment strategies, according to reports.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments highlighted that President Trump and responses from PM Modi indicate an early trade deal between India and US. The expected deal involves some concessions from both sides. If the reported 15-16 % tariffs on Indian exports to US materialises that would be a big positive for Indian economy and major boost to stock markets.
The market rally which has already begun in the festival season will accelerate enabling the Nifty to set new record highs. Unprecedented record sales during the last few days has the potential to improve corporate earnings. FIIs turning buyers recently and short covering are factors that can fuel the rally. Clearly, it is advantage bulls!
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