SENSEX, NIFTY50 set for a strong start as Trump cuts tariffs; GIFT NIFTY indicates gap-up opening

The Indian equity benchmarks are set to stage a massive gap up opening on Tuesday, February 3, after United States President Donald Trump slashed tariffs on Indian merchandise exports to 18% from 25%. The GIFT NIFTY futures index surged as much as 3.3% or 827 points, indicating a strong start for Indian markets.

In a much-awaited movie for India, United States lowered tariffs on Indian merchandise exports to US to 18% from 25% triggering an up move for Indian equities.

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, said.

United States President Donald Trump on his social media handle TruthSocial said, "Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%. They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO. The Prime Minister also committed to “BUY AMERICAN,” at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products."

"Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most. Thank you for your attention to this matter!," Trump added.

Responding to President Trump, Prime Minister Narendra Modi tweeted, "Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."

Following the trade deal announcement Indian American ADRs were trading sharply higher. ADR of Infosys, the country's second larges IT company rose e3% to $18.17. Wipro, ICICI Bank, HDFC Bank, Dr Reddy's Labs ADRs were also trading higher in range of 3%-6%.

India and the US agreed to a trade deal under which Washington will bring down reciprocal tariff on Indian goods to 18% from current 25%, US President Donald Trump said on Monday after a phone conversation with Prime Minister Narendra Modi.

Trump claimed India will move forward to reduce "tariffs and non tariff barriers" against the US to zero.

India will "likewise move forward to reduce their tariffs and non tariff barriers against the United States, to zero", Trump said.

Trump said Modi also committed to "buy American" at a much higher level, in addition to over $500 billion dollars of US energy, technology, agricultural, coal, and many other products.