The tide turns: India-US trade deal breaks the gloom

Summary: After months of selling pressure and policy overhangs, a sudden US-India trade deal has flipped market sentiment overnight. And investors are asking the same question again: Does this change the case for Indian equities, and who really benefits if it does? Just when Indian markets seemed trapped, battered by foreign outflows, rattled by the STT (Securities Transaction Tax) hike in the Union Budget 2026, and weighed down by tariff uncertainty, a single phone call has changed the narrative overnight. On February 2, US President Donald Trump announced a trade deal with India following a conversation with Prime Minister Narendra Modi. The effective tariff on Indian goods drops from 50 per cent to 18 per cent, effective immediately. Gift Nifty surged over 800 points, or roughly 3 per cent, in early trading. For investors who have endured months of uncertainty, this is worth understanding clearly. What the deal delivers The US has reduced the combined tariff on Indian goods from 50 per cent (a 25 per cent ‘reciprocal’ tariff plus a 25 per cent Russian oil penalty) to a flat 18 per cent. This puts India ahead of Vietnam and Bangladesh (20 per cent each) and Pakistan (19 per cent). In exchange, India has reportedly committed to reducing tariffs on US goods to zero, purchasing over $500 billion worth of American energy, technology, and agricultural products, and halting Russian oil purchases. PM Modi’