Indian equity benchmarks achieved a historic milestone on Tuesday, February 3, with the NSE Nifty closing at 25,727.55 points, gaining 639.15 points over the day's opening, while the BSE Sensex rallied 2,072.67 points to settle at 83,739.13. According to The Hindu, the Nifty 50 surged 639.15 points, or 2.55%, to 25,727.55, marking one of its best intraday performances in recent history, while the Sensex zoomed by as much as 4,205.27 to an intraday high of 85,871.73. The rally was buoyed by value buying in blue-chip oil & gas, banking and auto shares after facing a massive drubbing on Budget day on February 1. As per ET Now, the recovery came following President Trump's announcement of a comprehensive trade deal with India, where Washington will bring down the reciprocal tariff on Indian goods to 18% from current 25%. All sectoral indices showed huge gains with realty, auto, consumer durables and IT being the major gainers, up 4.47%, 3.78%, 3.69% and 3.04% respectively. All sectoral indices ended in the green, with some rising up to 5%, while 47 of 50 Nifty stocks closed higher, with stocks rising up to 11%. GIFT Nifty rallied nearly 1,000 points before easing a bit, signalling a broad-based relief rally. Market experts now expect a gap-up opening on Tuesday with the Nifty 50 index potentially breaking above the 25,500 hurdle in the near term. The 1,200 point open on the Nifty 50 index is also the biggest single-day move on the index in absolute terms in history, as reported by CNBC TV18.
The India-US trade deal has ignited a 2.87% jump in Gift Nifty, setting the stage for a potential short squeeze as foreign investors scramble to cover near-record short positions amid renewed market optimism. As per Moneycontrol, this surge reflects the market's response to the comprehensive trade framework that addresses long-standing tariff concerns. At close, domestic institutional investors were net buyers at ₹2,446.33 crore, while foreign funds were net sellers at ₹1,832.46 crore on Monday, according to exchange data. During the day's session, buying was across the board except for some profit taking in IT and healthcare stocks that saw gains on the Budget day. The day's session made investors richer by about ₹4.6 lakh crore with BSE's market capitalisation now at ₹455 lakh crore, which surged to ₹474 lakh crore in early trading before fluctuating throughout the session, as reported by CNBC TV18. BSE's midcap index up 0.8% and smallcap index up 0.2%. Among sectoral indices, BSE's utilities index closed 2.7% up while the power index closed 2.5% up and services index was up 2.4%. Early market reaction pointed to rising risk appetite, with Nifty 50 futures trading at GIFT City surging as much as 4.5% overnight following the announcement, signaling optimism ahead of Tuesday's session. Nifty futures on the NSE International Exchange traded 1,102.70 points, or 4.39% up at 26,244.50, hinting at a gap-up start for the domestic market on Tuesday. The stocks listed on the BSE added more than ₹20 lakh crore to their market capitalisation with the opening ticks on Feb 3, as noted by CNBC TV18.
The IT sector witnessed exceptional performance with the NIFTY IT index jumping nearly 6% to 40,301.4 in early trading hours of Tuesday, as reported by Moneycontrol. While the Trump tariffs did not directly impact IT companies, the souring relations between the two countries bore an impact on the firms. The trade deal, implying better relations between India and US, may have boosted the shares of IT companies who derive a major portion of their revenue from the American market. Persistent Systems and Mphasis shares jumped nearly 8 percent, while heavyweight Infosys, HCL Technologies and Tata Consultancy Services (TCS) shares surged more than 6 percent each. Wipro and Tech Mahindra shares rallied over 7 percent each, while Coforge and LTIMindtree shares gained more than 5 percent each. According to ET Now, analysts had repeatedly pointed out that any progress on the trade deal with the US would be positive for Indian equities. Key sectors that can benefit include textiles and apparel, auto ancillaries and engineering, specialty chemicals, agro and seafood exports, and select electronics and consumer manufacturers with US exposure, as noted by Divam Sharma from Green Portfolio PMS. As a result of this deal, all the export oriented names, particularly textile stocks such as Gokaldas Exports, Pearl Global, KPR Mill, Welspun Living, among others, along with shrimp exporters, auto stocks and others, will be in the spotlight during Tuesday's trading session. Shares of KPR Mill, Gokaldas Exports, Bharat Forge, Sona BLW, Samvardhana Motherson, Arvind, Welspun Living, Apex Frozen Foods, Indo Count, Waaree Energies and Premier Energies surged between 10%-20%, as reported by Upstox. All textile companies are locked in a 20% upper circuit following the shrimp names, auto stocks and others, as noted by CNBC TV18.
The chemical stocks witnessed exceptional gains with the Nifty Chemicals index surging 5.6% or 1,560 points to hit the day's high of 28,886.20, as reported by The Economic Times. In the 20-stock index, 19 traded in the green, with Aarti Industries emerging as the biggest gainer, jumping 19% intraday. The next in line were PCBL and Gujarat Fluorochemicals which gained up to 15% on the intraday basis. Navin Fluorine, Atul Deepak Fertilizers and Petrochemicals Corporation and UPL were up by over 5%, while SRF, Swan Corp, PI Industries, Sumitomo Chemical India, Deepak Nitrite, Coromandel International, Solar Industries India, Pidilite Industries, Linde India, Chambal Fertilizers & Chemicals, HSCL and Bayer Cropscience rallied up to 4%. The only laggard was Tata Chemicals, which was down 0.3%. Brokerages see a clear advantage in three key areas: operating leverage, China-plus-one benefits and rupee stability. As per Axis Direct, the deal will likely give chemical companies operating leverage as export volumes will likely recover by 20-25% following tariff ease, leading to a jump in factory utilisation rates. Bajaj Broking noted that tariff relief can support better pricing, higher volumes, and stronger customer relationships, particularly for companies operating in niche, high-margin applications. The rupee's worst performance for the past one year was linked to the delay in the US-India trade deal, with the INR rising 1.5% to 90.1250 per US dollar and on course for the best single day rise since 2018. Commodity and currency expert Anuj Gupta expects it to strengthen to 89.50 to 89 levels very soon. Chemical companies like Aarti Industries, UPL, SRF, Vinati Organics and Gujarat Fluorochemicals are preferred stock picks for Axis, as noted by The Economic Times.
The auto sector witnessed significant gains with the NIFTY Auto index surging more than 5% to 28,095.85 in early trading, as reported by Moneycontrol. Jefferies said that the key beneficiaries of the India-US trade deal includes auto ancillaries with meaningful exposure to the U.S. such as Sona BLW Precision Forgings, whose shares jumped 10 percent to trade at ₹549.45 apiece. Bharat Forge and Samvardhana Motherson shares gained nearly 10 percent each, while Tube Investments of India shares gained around 8 percent. UNO Minda shares rose around 6 percent. The shares of automakers like Mahindra & Mahindra, Tata Motors PV, Bajaj Auto, Eicher Motors, TVS Motors, Maruti Suzuki and others gained up to 3 percent. Buying was visible across the board as all the major sector gauges compiled by the NSE were trading higher led by the NIFTY Auto index's over 3.5% gain. NIFTY Realty, Consumer Durables, Bank, Private Bank, IT, Pharma, Realty, Bank and Financial Services indices also rose between 2.5%-4%, as reported by Upstox. Broader markets were also witnessing buying interest as NIFTY Midcap 100 index rose 3% and NIFTY Smallcap 100 advanced 2.9%. Gift Nifty is currently trading around 25,937 level, a premium of nearly 795 points from the Nifty futures' previous close, indicating a gap-up start for Tuesday's session. The Nifty midcap 100 index opened more than 2,359 points (4.09%) higher, as noted by CNBC TV18.
Market breadth remained extremely positive with 3,268 advances, 861 declines and 174 stocks unchanged on the BSE, where 4,303 stocks traded, as reported by The Hindu BusinessLine. A total of 114 stocks hit 52-week highs while 87 touched 52-week lows, with 220 stocks in the upper circuit and 125 in the lower circuit. On the Nifty 50, Adani Enterports led gains, rising 11.23% to ₹2,219.40, followed by Jio Financial Services up 8.71% at ₹265.35, Adani Ports higher by 7.78% at ₹1,512.30, Bajaj Finance up 6.15% at ₹959.25 and IndiGo gaining 5.05% to ₹4,923.70. Coal India was the sole loser on the index, down 0.05% at ₹423.30. Adani Ports, Jio Financial Services, InterGlobe Aviation, Bajaj Finance, Bajaj Finserv, Eternal, Axis Bank and Mahindra & Mahindra also rose between 3.7%-7.5%. On the broader market front, Nifty Midcap 100 was up 2.88% at 59,325.70, Nifty Smallcap 100 higher by 2.88% at 16,998.60, Nifty Next 50 gaining 2.70% to 68,882.20, Nifty Financial Services climbing 3.43% to 27,718.10 and Nifty Bank rising 2.60% to 60,142.05. Market participants gave a thumbs up to the much-awaited deal as Nilesh Shah of Kotak AMC said that the deal removes a hanging sword over rupee, equity and rates market. "India US trade deal has gone through ups and downs like a roller coaster. While devil is in the details, it removes a hanging sword over rupee, equity and rates market. Let us hope that it is a win-win deal for both the countries as they have lot to gain through cooperation," said Nilesh Shah, MD, Kotak Mahindra AMC. Madhusudan Kela, founder at MK Ventures, described the day as 'true Diwali from market's perspective', noting that "there was some amount of feel-good feeling that was lacking... markets have seen very, very meaningful corrections." He added that "this is a clear market which will now become buy on decline... Everyone's portfolio had taken a beating in the last 15 months, and something like this is a feel-good feeling." As per ET Now, among the Nifty 50 sectoral indices, Nifty Realty surged the most, jumping 4.47%, followed by Nifty Consumer Durables rising 3.80%, Nifty Chemicals up 3.53%, and Nifty Auto advancing 3.48%. Financial Services, Healthcare, and Pharma indices also logged strong gains between 3% and 3.3%, while IT, Private Bank, Metal, and PSU Bank added between 2% and 2.9%. Even traditionally defensive sectors such as FMCG and Oil & Gas closed higher, ensuring a broad-based rally across the market. From the 30 SENSEX firms, Adani Ports surged the most, by 9.12%, followed by Bajaj Finance, InterGlobe Aviation, Power Grid, Sun Pharma, Bajaj Finserv and Reliance Industries. Tech Mahindra and BEL were the only laggards from the blue-chip pack.
A wave of short covering by foreign portfolio investors (FPIs) helped push the Nifty 50 nearly 3% higher on Tuesday after a surprise India-US trade agreement cut tariffs on Indian exports. Dealers said the positive news forced overseas investors, who were carrying record bearish positions in derivatives, to rapidly unwind shorts, but a flow reversal is yet to take shape. Foreign investors had entered Tuesday's session holding record bearish positions in index futures and options. Data showed FPIs were carrying a net short exposure of 8,26,636 index options contracts at the end of Monday's trade, while net short positions in index futures alone stood at 2,27,144 contracts. Short positions accounted for nearly 90.8% of their total derivatives exposure. When markets surged following the announcement of the US-India trade deal that lowered tariffs on Indian exports, many of these large short positions were forced to close, intensifying buying pressure and pushing benchmark indices sharply higher. Feroze Azeez, Joint CEO of Anand Rathi Wealth Ltd, said the rally was primarily a technical reaction to positioning rather than a shift in sentiment. "Foreign investors had built very large short positions in index futures ahead of the Budget. When the market unexpectedly rallied because of the US-India trade deal announcement, many of these positions were quickly closed, leading to short covering and adding to the upward move." "While the price action indicates meaningful short covering rather than simple unwinding, long-term reversal still hinges on corporate earnings, macro environment and global stability," he said. Anand James, Chief Market Strategist at Geojit Investments Ltd, said that FPIs' short exposure in index futures has remained near 80% or higher since July 2025. "A structural shift in FPIs' positioning will need a few more days to get established. We have seen several instances of brief easing, only to return to heavily short levels soon after." However, provisional data from the NSE showed FPIs were net buyers of ₹5,426 crore in the cash market on Tuesday, while domestic institutional investors bought ₹345 crore, indicating that some fresh buying accompanied the derivatives covering. While the finalisation of the long-drawn trade deal invites some foreign inflows into the Indian equity market, FPIs remain cautious and await recovery in corporate earnings.
According to The Economic Times, the India-US trade deal marks a turning point for equities by removing a major source of tariff uncertainty, and lifting investor sentiment, according to top money managers. They said the worst of the market stress may have peaked for now, but the trade agreement is unlikely to be a game-changer, and returns will ultimately hinge on an earnings revival. Most fund managers expect equity returns in 2026 to broadly track corporate earnings—about 12–15%. They favour diversified portfolios, export-oriented sectors and selective opportunities in mid and small-caps. Nagaraj Shetti of HDFC Securities said that as long as the index sustains above 25,600, the probability of a move towards 26,000 and then 26,300 remains high in the near term. He added that 25,600 now acts as an immediate support. Nilesh Jain of Centrum Broking said that the Nifty's structure looks positive for a move towards 26,100, with a buy-on-dips strategy remaining favourable as long as the index holds above 25,250. LKP Securities' Rupak De pointed to a swift shift in sentiment within a single session, from 'sell on rise' to 'buy on dips'. Immediate support lies in the 25,470-25,500 zone, while resistance is placed between 26,000 and 26,200. Vinay Rajani of HDFC Securities noted that the Nifty's 1,770-point rebound from the recent swing low of 24,571 has pushed the index back above its 20, 50, 100 and 200-day EMAs, signalling a bullish trend reversal across timeframes. Key support is seen in the 25,500-25,650 range, with resistance at 25,863 and 26,373. Within the broader market, the Midcap 100 rose 2.84% and Smallcap 100 gained 2.82%, keeping pace with the benchmark. The trade deal also propelled a sharp rally in textile, leather, gems and jewellery, auto ancillary, seafood exports, and speciality chemicals stocks. Auto ancillaries, defence, textiles, EMS, consumer durables, IT services and utilities are expected to be the key beneficiaries, while financials could see second-order gains driven by improved growth visibility, note analysts.
