The benchmark BSE Sensex rose nearly 3,500 points, or 4.4%, to 85,323 in early trade, while the Nifty 50 climbed 1,200 points, or 4.7%, to 26,308. The broader market also mirrored robust trends, rising 3.4% each on Tuesday.
The rally added over about Rs 13 lakh crore in investor pockets within 15 minutes of early trade, with the total market capitalization of BSE-listed companies surging to Rs 468.32 lakh crore.
Here’s what’s behind the massive rally:
India-US Trade Deal
Following months of negotiation, India and the US signed a trade deal after US President Donald Trump said the US would reduce reciprocal tariffs on India to 18%, a sharp reduction from the earlier 50%, while India would also move to cut tariffs and non-tariff barriers on American goods to zero. For Indian markets, the deal removes a major overhang that had kept foreign investors on the sidelines and dragged equities into a phase of prolonged underperformance. Markets struggled through January, with the Nifty losing over 1,000 points at its worst, even as foreign portfolio investors offloaded billions of dollars worth of stocks.
Rupee strength lends support
A firmer rupee added to the stabilising tone in domestic assets, helping ease some of the pressure from global market volatility. The Indian currency opened at 90.40 from the previous. Experts say the rupee will strengthen sharply and the combination of US-India trade deal, the EU-India trade deal and the growth-oriented Budget will boost the market sentiments and the animal spirits in the economy.
FII short covering
FII short covering emerged as a key driver of Tuesday’s sharp market rebound. Technical factors amplified the move as traders rushed to cover short positions, which were estimated to be near 90%. In today’s session, Nifty bounced from oversold territory and reclaimed the 26,000 level.Commenting on the setup, Anand James, Chief Market Strategist at Geojit Investments, said that Tuesday’s decisive close above 25,000 has brought the 25,800 target into play, with the possibility of an extension towards 26,200. However, he cautioned that a failure to sustain above 25,800 could see the Nifty consolidating in the 25,430–25,340 zone.
Heavyweights lead rally
Heavyweights powered the rally, with frontline stocks leading from the front. Mukesh Ambani’s Reliance Industries jumped nearly 4%, while Adani Ports surged 8%, providing strong momentum to the benchmarks. HDFC Bank, L&T, Bajaj Finance, Eternal, ICICI Bank and Infosys echoed the positive sentiment, rising as much as 5%. The rally was further underpinned by the Union Budget 2026’s capex push, which boosted expectations of stronger order inflows and improved earnings visibility across sectors.
Positive global cues
The 30-stock Dow jumped about 515 points, or 1.05%. The S&P 500 advanced 0.5%, and the tech-heavy Nasdaq Composite gained almost 0.6%, kickstarting the new month on a strong footing. Following the trade deal, Asian markets surged on Tuesday, led by Japan and South Korea. Japan’s Nikkei 225 jumped as much as 3%, while the Topix gained 2.34%, while South Korea’s Kospi soared over 5%. In Greater China, the Hong Kong Hang Seng Index advanced 0.48%, while the mainland CSI 300 added 0.75%.
Australia’s S&P/ASX 200 climbed 1.3% after the Reserve Bank of Australia raised its policy rate by 25 bps to 3.85%, marking its first hike since November 2023 amid persistent inflationary pressures.
Content Source: economictimes.indiatimes.com