India-US Trade Deal Progress Fuels Optimism on Dalal Street
Market sentiment on Dalal Street has received a significant boost as the long-awaited US-India trade agreement takes a major step toward finalization. Investors are anticipating a positive opening for the leading indices when trading resumes on Monday, driven by renewed confidence in bilateral economic relations.
Market Indicators Point to Bullish Opening
The Gift Nifty, a crucial indicator used by traders to gauge short-term market direction, closed 0.7% higher on Saturday. This upward movement is providing substantial confidence to market participants about a higher opening for the week ahead. This optimism follows Friday's trading session where the Sensex, after a soft opening and brief dip into negative territory, managed to close 266 points higher at 83,580 points.
The late recovery on Friday was directly attributed to growing expectations of constructive developments regarding the India-US trade agreement. Early Saturday, both countries jointly released a statement confirming agreement on several key areas of bilateral trade, further solidifying market confidence.
Analysts Highlight Multiple Benefits
Market analysts emphasize that beyond the immediate market reaction, the trade deal holds substantial long-term benefits for India. These include not only reduced tariffs but also potential increases in exports to the United States, which could lead to expanded employment opportunities within export-oriented sectors. Additionally, market players note the agreement has significant potential to attract greater foreign capital inflows into Indian markets.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the past week has been dominated by three major market-moving events: the Union Budget announcements, progress on the India-EU trade deal, and the much-anticipated developments on the US-India trade agreement. "The market initially reacted negatively to the hike in Securities Transaction Tax on futures and options trades," Vijayakumar explained, "but it smartly recovered on the positive news surrounding the US-India trade deal."
Foreign Fund Flows Show Dramatic Reversal
Early indicators for the current month reveal a marked change in foreign institutional investor behavior. Data from the National Securities Depository Limited shows that during the first week of the month, foreign funds were net buyers to the tune of Rs 8,129 crore. This represents a dramatic reversal from the previous month, where they had withdrawn approximately Rs 36,000 crore from the Indian market.
Vijayakumar identified a crucial factor behind this shifting sentiment: the appreciation of the Indian rupee. The currency strengthened from a record low of 91.72 against the US dollar to 90.30, before weakening slightly to close the week at 90.70. Despite this minor retreat, analysts expect the rupee to stabilize and gradually appreciate to below 90 against the dollar by the end of March 2026.
"This currency appreciation has the potential to trigger more foreign inflows into India," Vijayakumar stated. "However, a lot will ultimately depend on how the broader artificial intelligence trade landscape develops and impacts global investment patterns."
The convergence of these factors—trade deal progress, reversing foreign fund flows, and currency stabilization—creates a cautiously optimistic environment for Indian markets as they prepare for the new trading week.
