India-U.S. Trade Deal Sparks Market Rally

India's financial markets surged following a trade deal that reduced U.S. tariffs on Indian goods to 18%. The Nifty 50 index and the rupee experienced significant gains, while the 10-year benchmark bond yields fell. The deal promises to boost foreign sentiment towards Indian assets.

India's financial markets witnessed a sharp rally on Tuesday, following a crucial trade agreement that slashed U.S. tariffs on Indian products from 50% to 18%.

This significant development was lauded by investors as it alleviates a major hurdle affecting the nation's stocks, bonds, and currency. The Nifty 50 index surged nearly 5%, marking its strongest one-day performance in five years. Meanwhile, the Indian rupee appreciated over 1%, trading at 90.40 per dollar. Concurrently, yields on India's 10-year benchmark bond declined by 5 basis points to 6.72%.

U.S. President Donald Trump announced the agreement via social media after discussions with Indian Prime Minister Narendra Modi. The deal will halt Russian oil purchases and lower trade barriers on U.S. exports. The trade breakthrough is expected to improve foreign investment sentiments, reversing the trend of record foreign outflows seen since tariffs were initially imposed. This comes shortly after India inked a similar comprehensive trade agreement with the European Union.