Indian Markets Rally as Reliance, Export-Focused Stocks Surge After India–US Trade Understanding

Indian equity markets witnessed a strong upswing on Tuesday morning, with benchmark indices moving sharply higher and nearing record territory. The rally was driven by heavyweight stocks such as Reliance Industries and a broad-based rise in export-linked sectors, following the announcement of a trade understanding between India and the United States that eased long-standing tariff-related concerns.

At the opening bell, markets registered their strongest single-session jump in nearly five years. The Nifty 50 climbed close to its all-time high, while the BSE Sensex also posted substantial gains, reflecting renewed optimism among investors. By mid-morning, the Nifty was trading at around 25,800 levels, up nearly 3%, while the Sensex hovered close to 84,000, marking a similar percentage rise.

Broad-Based Buying Across Sectors

Buying interest was visible across all major sectors, indicating a broad-based recovery rather than a narrow rally. All key sectoral indices traded in positive territory, with capital goods, automobiles, metals, energy, and export-oriented industries leading the gains. Mid-cap and small-cap stocks also outperformed, rising by around 3%, suggesting improving risk appetite among domestic and foreign investors.

Out of the 50 stocks on the Nifty index, a large majority advanced during early trade. Reliance Industries emerged as the top contributor to the rally, gaining about 4% and providing significant support to both benchmark indices.

Market participants attributed the upbeat sentiment to clarity emerging from the India–US trade arrangement, which removed a major source of uncertainty that had weighed on equities in recent months.

Trade Deal Lifts Sentiment

According to official announcements, the agreement includes a reduction in US tariffs on Indian goods to 18%, down from earlier elevated levels. In return, India has agreed to ease certain trade barriers and adjust its energy import strategy. The move is being seen as a positive step toward stabilising bilateral trade relations and improving visibility for export-driven Indian companies.

Export-heavy sectors such as auto components, textiles, apparel, seafood processing, engineering goods, and speciality chemicals recorded sharp gains following the announcement. These industries had faced margin pressure and order uncertainty due to higher tariffs and slowing global demand over the past year.

Market analysts believe the deal could support earnings visibility for such sectors and potentially lead to a re-rating of valuations, especially for companies with strong overseas exposure.

Rupee Strengthens, FPI Concerns Ease

The Indian rupee also strengthened notably in early trade, appreciating by over 1% against the US dollar. The currency traded near the 90.3 level, supported by expectations of renewed foreign capital inflows as global investors reassess India’s market outlook.

Over the past year, concerns around trade policy, currency depreciation, and muted corporate earnings had triggered sustained selling by foreign portfolio investors (FPIs). Since the beginning of 2025, overseas investors have reportedly sold Indian equities worth around $23 billion, leading to underperformance compared to several Asian and emerging market peers.

Market experts suggest that the trade understanding could help break this cycle by improving currency stability and restoring confidence among global funds. A stronger rupee reduces imported inflation risks and improves the attractiveness of Indian assets for long-term investors.

Analysts See Improved Outlook

Equity strategists noted that uncertainty surrounding the delayed trade agreement, limited exposure to emerging global themes such as advanced artificial intelligence, and subdued earnings growth were key factors behind foreign investor caution earlier. With one of these overhangs now addressed, analysts expect selling pressure to moderate in the coming months.

“The agreement improves earnings visibility and supports India’s positioning as a relatively stable destination among emerging markets,” said a market analyst tracking capital flows and valuation trends. He added that sectors linked to exports and domestic capital expenditure could benefit the most if follow-up policy measures are implemented smoothly.

Portfolio managers also highlighted that tariffs had contributed to rupee weakness, which in turn accelerated capital outflows. The easing of trade tensions is now expected to encourage a more balanced evaluation of Indian equities by global investors.

Outlook Ahead

While Tuesday’s rally reflects strong short-term optimism, experts caution that sustained momentum will depend on execution of the trade commitments, corporate earnings growth, and global market conditions. Investors will also watch for signs of fresh foreign inflows and further policy clarity in the coming weeks.

For now, the sharp rise in stocks and the rupee has injected fresh confidence into Dalal Street, offering relief after months of subdued performance and signalling a potentially more stable phase for Indian financial markets.