Indian Equities Stage Spectacular Rebound on US Trade Deal News
The Indian stock market witnessed one of its most dramatic single-day rallies in recent years on Tuesday, February 3, as investors enthusiastically welcomed the formal announcement of the long-awaited India–United States trade agreement. This development completely transformed the cautious market sentiment that had prevailed in previous sessions, sparking aggressive buying activity across all sectors and market capitalizations.
Benchmark Indices Record Massive Gains
The benchmark BSE Sensex skyrocketed by more than 4,200 points, registering an impressive gain of 5.1% to reach an intraday peak of 85,871.73. Similarly, the Nifty 50 index surged by 1,252 points, or 5%, closing at 26,341.2 during the trading session. This broad-based participation indicated widespread investor optimism following the trade breakthrough.
Trade Agreement Details and Market Context
The remarkable rally was triggered by confirmation from U.S. President Donald Trump that reciprocal tariffs on Indian goods would be substantially reduced from 50% to 18%. In return, India agreed to significantly lower both tariff and non-tariff barriers on American products, effectively bringing them down to zero. This surge came just days after markets had reacted negatively to the Union Budget announced on February 1, with indices falling nearly 2% in the previous session after the Budget proposed a sharp increase in Securities Transaction Tax (STT) on derivatives.
The STT adjustments included:
- Futures STT raised to 0.05% from 0.02%
- Options STT increased to 0.15% from 0.10/0.125%
Market analysts believe the trade breakthrough has decisively shifted the market narrative from budget-related concerns to renewed growth optimism.
Expert Perspectives on Market Transformation
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, commented, "The combination of the US-India trade deal, the EU-India trade deal, and the growth-oriented Budget will significantly boost market sentiments and the animal spirits in the economy. The stock market, anticipating and discounting these developments, is poised for a sustained boom."
Economists also emphasized the broader geopolitical implications of the agreement. Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Group, noted that Indian equities had been trading at a geopolitical discount due to tariff-related tensions and diplomatic friction, which is now beginning to dissipate.
He elaborated, "With the India–US treaty now formally in place, that overhang is beginning to lift. The crucial shift is not merely incremental tariff relief, but the restoration of geopolitical and trade stability. As risk premia normalize, India once again appears highly investable to global capital—a high-growth, politically aligned, strategically important economy with deep domestic demand and improving external linkages to both the United States and Europe."
Technical Analysis: Stocks Showing Resilience
Amid the sharp market rebound, Sachin Gupta, Vice President – Research at Choice Equity Broking, identified several stocks that continue to display resilient technical structures despite recent broader market weakness. According to his analysis, these counters are holding firm near strong support zones, showing improving momentum indicators, and offering favorable risk-reward setups for traders.
VARUN BEVERAGES (VBL)
VBL is demonstrating signs of a positive turnaround after rebounding strongly from its immediate support zone near 460 and sustaining above the 100-day DMA. This highlights improving price stability and growing buyer confidence. The stock's ability to maintain levels above this key moving average indicates a shift away from the recent corrective phase.
Momentum indicators further support the bullish outlook, with the Daily RSI pulling up from lower levels, signaling renewed buying interest and bullish presence. Additionally, the price has moved decisively above the Ichimoku Cloud, suggesting strengthening bullish bias and improving trend structure.
Trading Strategy: Consider buying VBL in cash around 475-478 with a stop loss at 455 and targets at 500/515. The 460 zone is expected to act as crucial support.
POWER FINANCE CORPORATION (PFC)
PFC is exhibiting a positive technical setup after registering a consolidation breakout and sustaining above the 100-day EMA. This indicates improving price strength and a potential shift toward a bullish phase. The stock's ability to trade above this key moving average highlights growing buyer confidence and trend stability.
Adding to the positive outlook, strong volume participation has been observed over recent trading sessions, confirming accumulation at higher levels. A trendline breakout on the daily chart further strengthens the bullish bias, suggesting the stock may be entering a fresh upward leg.
Trading Strategy: Consider buying PFC in cash around 378-380 with a stop loss at 367 and targets at 400/408. The 370 zone serves as immediate support.
DATA PATTERNS (INDIA) LIMITED
DATAPATTERN is currently trading near the ₹2520 zone, reflecting steady price behavior following a corrective phase. On the daily chart, the stock has recently managed to close above its key 21-day Exponential Moving Average (EMA). This breakout signals a shift in short-term momentum from neutral to bullish and strengthens the overall positive bias.
Trading Strategy: Traders may consider buying on dips in the range of ₹2470–2500, keeping a stop loss at ₹2298. On the upside, the stock has potential to move towards ₹2700 and ₹2800 in the short to medium term, provided broader market sentiment remains supportive.
LARSEN & TOUBRO (L&T)
After forming a base near the 3720 zone, L&T has witnessed a steady recovery on the daily chart and is now comfortably sustaining above its 200-day DMA. This indicates a revival in the broader trend, with holding above this long-term moving average reflecting improving price stability and strengthening buyer confidence.
Momentum indicators are also turning supportive, with the RSI rebounding from oversold territory, signaling renewed buying interest and potential momentum shift. Additionally, the stock has taken support near the lower Bollinger Band and is gradually moving toward the mid-band, suggesting price action normalization and scope for further upside.
Trading Strategy: Consider initiating long positions in the range of 3850–3870, with a strict stop loss placed below 3650. On the upside, the stock has potential to move toward 4100 and 4250 levels in the short to medium term.
Disclaimer: The views and recommendations presented above are those of individual analysts or broking companies, and not of Mint. Investors are strongly advised to consult with certified experts before making any investment decisions.
