Ahmedabad/Surat, Feb 3 The Indian share market surged on Tuesday after the announcement of a trade agreement between India and the United States, which lowered tariffs on Indian exports.
The deal, finalised after discussions between Prime Minister Narendra Modi and US President Donald Trump, cuts tariffs from 50 per cent to 18 per cent, ending months of uncertainty that had been weighing on investor sentiment.
The reduction in tariffs has had a notable impact on key sectors, particularly textiles. In Surat, textile stocks surged sharply, reflecting optimism among investors and analysts.
Experts believe the rally is a direct result of the trade agreement, which had been pending for eight months.
The prolonged delay had created uncertainty in the market, and its resolution was met with positive reactions.
Danish Golwala, managing director of Shri Nivesh Share Market, highlighted the broader context of recent market fluctuations.
"In the budget presented on Sunday, the government increased the Securities Transaction Tax (STT) on futures and options. As a result, the market reacted negatively and fell sharply because there was no expectation that anything related to the equity market would come in the budget. On the contrary, there was hope that the government might provide some relief in long-term capital gains tax, such as increasing the existing limit of Rs 1.25 lakh to Rs 2 lakh. That did not happen, and instead, STT was increased. The market reacted negatively and fell significantly that day," he said.
Golwala added that the recent implementation of the India-US trade deal has changed the market's outlook. "The tariff rate has been reduced from 50 per cent to 18 per cent, and this has prompted a very positive reaction from the market today," he said.
In Ahmedabad, share market expert Dipen Dudhiya noted that the reduction in tariffs has created new investment opportunities. "Now is the time to invest in the share market, with a potential growth of up to 15 per cent in the SENSEX and NIFTY," he said.
Dudhiya added that foreign investors are returning, drawn to promising sectors such as energy, textiles, solar panels, banking, and the auto insurance industry.
He also said that mid-cap and small-cap stocks have become attractive for investment.
Share market expert Nimesh Palsanawala attributed the market rally to the reduction in US tariffs and emphasised the link between stable governance and investor confidence.
"If the government remains stable, it can make firm policy decisions, which increases investor confidence and encourages investment," he said.
The reduction of tariffs and resolution of the long-pending trade deal between India and the United States is widely seen as a key factor in restoring investor optimism across multiple sectors and enhancing prospects for growth in the Indian equity market.
- IANS
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