Indian Shares Rally After US Trade Deal

Indian shares ended Tuesday’s session on a buoyant note after U.S. President Donald Trump unveiled a trade deal with India that slashes U.S. tariffs on Indian goods to 18 percent from 50 percent in exchange for India halting Russian oil purchases and lowering trade barriers.

The breakthrough following a high-level telephonic conversation between Trump and Indian Prime Minister Narendra Modi helped ease tariff-related concerns that have weighed on domestic markets for months.

However, the information available was limited to President Trump’s tweets and press statements, with no details.

There were questions over several key aspects such as the opening of the agriculture sector, the reduction of tariffs to “zero” and a pause on the purchase of Russian oil, as claimed by Trump.

Media reports quoted sources as saying that Union Minister Piyush Goyal will soon address Parliament on the deal.

Meanwhile, investor sentiment was also underpinned by falling crude oil prices on easing U.S.-Iran tensions, big gains in rupee and a rebound in the precious metals market after a steep sell-off triggered by the nomination of Kevin Warsh as chairman of the U.S. Federal Reserve.

The Indian rupee saw a strong appreciation, rising to a three-week high of Rs 90.19 against the greenback after Moody’s Ratings said the reduction of the U.S. tariff rate on most Indian goods is credit positive for labor-intensive sectors such as gems, jewelry, textiles and apparel.

Moody’s also said that India is unlikely to cease all Russian oil purchases immediately, but a complete shift toward non-Russian oil could tighten supply elsewhere, raise prices and pass through to higher inflation given that India is one of the world’s largest oil importers.

The benchmark BSE Sensex surged 2,072.67 points, or 2.54 percent, to 83,739.13, while the broader NSE Nifty index soared 639.15 points, or 2.55 percent, to 25,727.55.

The BSE mid-cap and small-cap indexes advanced 2.8 percent and 2.9 percent, respectively.

The market breadth was strong on the BSE, with 3,299 shares rising while 991 shares declined and 132 shares closed unchanged.

Adani Ports topped the gainers list to end up more than 9 percent while Bajaj FinServ, Sun Pharma, Power Grid Corp, Indigo and Bajaj Finance climbed 4-7 percent.

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