India-US trade deal impact: The Indian rupee appreciated sharply against the US dollar on Tuesday after American President Donald Trump and Prime Minister Narendra Modi announced a trade agreement between India and the US late Monday night. Rupee appreciated by over 1% against the US dollar in early trade, rising to levels of 90.40. Rupee has been the worst performing Asian currency in the last year, with persistent selloff from Foreign Institutional Investors (FIIs) causing the rupee to hit a new record low of 92 versus dollar a few weeks ago. Trump has announced that tariffs on India will be reduced to 18% with immediate effect.Meanwhile, Indian equity benchmarks, Nifty50 and BSE Sensex also opened sharply up in trade on Tuesday. Both indices rallied over 2%, with Sensex rising over 2,300 points and Nifty50 soaring over 700 points.Short covering by foreign institutional investors played a central role in Tuesday’s strong market rally. The upswing was reinforced by technical triggers as traders hurried to unwind bearish bets, with short positions estimated to be close to 90 percent. During the session, the Nifty rebounded from oversold levels and moved back above the 26,000 mark.Anand James, Chief Market Strategist at Geojit Investments, said the index’s firm close above 25,000 on Tuesday has opened the door for a move towards 25,800, with scope for a further rise to around 26,200. He added, however, that if the Nifty fails to hold above 25,800, it could slip into a consolidation phase within the 25,430 to 25,340 range.Large-cap stocks led the rise, with blue-chip names driving the benchmarks higher. Shares of Reliance Industries climbed nearly 4 percent, while Adani Ports surged about 8 percent, delivering a strong boost to the indices. Other major stocks including HDFC Bank, L&T, Bajaj Finance, Eternal, ICICI Bank and Infosys also mirrored the upbeat mood, gaining as much as 5 percent. Support for the rally also came from the Union Budget 2026’s emphasis on capital expenditure, which lifted expectations of healthier order flows and clearer earnings prospects across sectors.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
