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Markets-  Indian equity markets are set for a strong start after global cues turned sharply positive following confirmation of a long-awaited trade agreement between India and the United States.

Indian stock indices closed Monday’s volatile session with solid gains, reflecting renewed optimism among investors. The benchmark Sensex advanced 943.52 points, or 1.17 percent, to settle at 81,666.46, while the Nifty 50 rose 262.95 points, ending the day at 25,088.40. The positive momentum was further reinforced in after-market activity, with GIFT Nifty surging more than 800 points during evening trade, signaling a potentially robust opening in the next session.

Market sentiment lifted by overnight global developments

The sharp move in GIFT Nifty came after a key announcement from the United States, which eased concerns around trade barriers and strengthened risk appetite across Asian markets. Investors responded positively to indications that trade tensions between the two countries could finally see meaningful resolution after months of negotiations.

Market participants noted that the strong close on Monday, combined with upbeat global cues, has created a favorable setup for domestic equities. Analysts expect early trade to reflect this optimism, especially in export-oriented sectors that stand to benefit from lower tariff barriers.

Trade agreement announcement by US President

The rally was triggered after US President Donald Trump confirmed that Washington and New Delhi had reached an agreement on a bilateral trade deal. The announcement followed a direct conversation between Trump and Indian Prime Minister Narendra Modi on Monday, February 2, 2026.

In a statement shared on his social media platform Truth Social, Trump said the United States would lower its reciprocal tariffs on Indian imports to 18 percent. This marks a reduction from the earlier 25 percent level that had been in place as part of previous trade measures.

According to Trump, the decision was taken with immediate effect, citing mutual respect and long-standing diplomatic ties between the two leaders. He described the agreement as a step taken in the spirit of cooperation and partnership between the two nations.

Details of the tariff reduction

Under the newly agreed framework, Indian goods entering the US market will now face an 18 percent reciprocal tariff, offering some relief to exporters who had been grappling with higher costs. The earlier 25 percent rate had raised concerns among Indian manufacturers, particularly in sectors such as engineering goods, textiles, and select consumer products.

While the announcement clarified the reduction in reciprocal tariffs, there was no immediate confirmation from either government regarding additional duties that had been imposed earlier. Those extra tariffs were linked to India’s purchase of Russian oil and had added another layer of complexity to bilateral trade discussions.

Market observers cautioned that further clarity on these additional levies would be important for assessing the full economic impact of the agreement.

Response from the Indian Prime Minister

Prime Minister Modi acknowledged the development in a public message, thanking President Trump for the decision to reduce tariffs on Indian products. He described the conversation as constructive and welcomed the move as a positive step for Indian exporters and domestic industry.

In his statement, Modi highlighted that the tariff reduction would benefit Made in India products and strengthen economic ties between the two countries. He expressed appreciation on behalf of India’s population, noting that improved market access would support growth and employment.

Implications for Indian markets and economy

The announcement is expected to have a near-term positive impact on investor sentiment, particularly for companies with significant exposure to the US market. Lower tariffs could improve profit margins and competitiveness for Indian exporters, which may be reflected in sector-specific stock movements.

Economists note that while the deal signals progress, sustained benefits will depend on the final scope of the agreement and the resolution of pending trade issues. Still, the immediate reaction in financial markets suggests confidence that bilateral relations are moving in a constructive direction.

As markets prepare to open, investors will closely track official statements and any further details emerging from both governments to gauge the longer-term implications of the trade pact.