Mumbai, February 3, 2026: Indian stock markets opened and continued to trade sharply higher on Tuesday as hopes of a trade deal between India and the United States spread across Dalal Street, pushing the benchmark indices to multi-percent gains in early trade.
Late morning trade on Tuesday saw the BSE Sensex surge past 2,300 points to trade around ~83,970, while the Nifty 50 traded above 25,800.
The surge in the Indian equity markets was driven by hopes that the trade deal, which features substantial cuts in tariffs on Indian exports to the U.S., could help improve earnings of export-oriented sectors and lead to a resumption of foreign investment inflows into Indian equities.
| Index | Level | Change |
|---|---|---|
| Sensex | ~83,970 | +2,300+ pts* |
| Nifty 50 | ~25,800+ | +700+ pts* |
Key Sector Moves
The strong rally was sector-wide, with key sectors that have been affected adversely by tariff and trade worries in the recent past leading the charge:
📈 Pharma
The pharma sector was one of the major gainers, with expectations of higher exports and fewer tariff hurdles pushing the sector’s stocks. The pharma sector’s stocks saw increased buying interest, with key stocks in both the Sensex and Nifty indices rising.
🚗 Auto
The auto sector also saw increased buying interest, with trade deal hopes pushing exports and component orders. Auto component and passenger car stocks rallied sharply, with some stocks rising by notable percentage points.
💻 IT
The IT sector also rallied, with the Nifty IT index rising by ~2.5%. Key IT stocks like Infosys, HCL Tech, and other service exporters saw buying interest, with renewed hopes of U.S. demand.
What’s Driving the Surge
🟢 Trade Deal with the U.S.
The major catalyst behind the surge was the trade agreement announced between India and the U.S. According to the trade agreement, the U.S. has agreed to reduce tariffs on Indian exports substantially. This is expected to give a boost to Indian exports, particularly in the automobile, textile, and pharma sectors.
💼 Foreign Investment Interest
According to market strategists, the trade agreement may help turn around the recent trend of foreign fund outflows and could attract fresh foreign investments, especially in export-facing sectors and midcaps.
🪙 Broader Market Participation
It was not just the major indices that surged, but midcaps and smallcaps also recorded substantial gains.
What Investors Are Watching Next
📌 Earnings Calendar: The quarterly earnings of several large companies are due today, and analysts believe that this will inject new catalysts into the market story.
📌 Macro Cues: The rupee, bond yields, and foreign exchange flows will be closely watched as investors gauge the sustainability of the rally in the backdrop of global economic data and central bank policies.
