Indian equity markets experienced a strong opening on Tuesday after India and the United States revealed their long-awaited trade agreement which included a complete reduction of US tariffs on Indian goods.

The benchmark Nifty 50 index increased by almost 5% during the first trading session because investors displayed strong market confidence after the US announced its decision to decrease tariffs on Indian products to 18% from previous levels above 50%.

US President Donald Trump made a statement about tariff reductions for Indian exports during his Monday speech in the US. He mentioned that India had agreed to decrease both its tariff and non-tariff restrictions which it had imposed on American products.

Washington had previously imposed total tariffs which reached 50% on Indian exports. In addition to the 25% tariff which Washington imposed on Indian imports of Russian oil. Trump announced that India had reached an agreement which would stop its Russian oil imports while it would start importing more energy from the US.

Prime Minister Narendra Modi used his X post to announce that the United States will now charge US market tariffs which will decrease for “Made in India” products. He also expressed his commitment to support worldwide efforts which aim to achieve peace and stability and economic development.

Market participants declared that Indian assets had suffered declines because of the missing formal trade agreement even though the country showed strong economic growth. Citi Research published its Tuesday report which showed that US–India trade relationship uncertainty had caused a gap between India’s strong economic prospects and the weak performance of some asset classes.

Analysts believe the tariff reduction exceeded market expectations. Trideep Bhattacharya, President – Equities at Edelweiss Asset Management, said the outcome was “materially better than consensus forecasts.”

She explained that the US agreement when evaluated with the India–EU free trade agreement creates one of the most significant foreign growth factors which will support Indian economic development in 2026.

The trade breakthrough has lifted mood across all sectors because investors expect that both export competitiveness and company earnings will improve during the upcoming months.