Indian stock markets opened higher on Wednesday after US President Donald Trump signaled fresh momentum in India-US trade negotiations, sparking optimism among investors. The Sensex and Nifty 50 were both up about half a per cent in early trading, reflecting hopes of a breakthrough on tariffs that have weighed on equities for months.
Speaking in Washington on Tuesday, Trump said the two nations were “continuing negotiations to address the trade barriers between them,” and expressed confidence that discussions with Prime Minister Narendra Modi would reach a “successful conclusion.” He described Modi as a “very good friend,” suggesting a softer stance after months of friction.
Tensions escalated earlier this year when Trump imposed a 50 per cent tariff on Indian goods in response to New Delhi’s purchase of Russian oil. The move strained relations and directly hurt sectors such as textiles, gems and jewellery, electronics, and processed foods — industries heavily reliant on the US market.
Modi responded warmly on X, formerly Twitter, underscoring the strength of the partnership. “India and the US are close friends and natural partners. I am confident our trade negotiations will pave the way for unlocking the limitless potential of the India-US partnership. Our teams are working to conclude these discussions at the earliest,” Modi wrote, adding that he was also looking forward to speaking with Trump soon.
For investors, the prospect of tariffs being rolled back is a welcome relief. An early trade deal could abolish the additional 25 per cent duty currently weighing on Indian exports, giving listed companies in affected sectors a much-needed earnings boost.
Yet, market watchers are urging caution. On the same day he praised India, Trump also reportedly pushed European Union officials to consider tariffs of up to 100 per cent on both China and India, a sign that his trade stance remains unpredictable.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said Trump’s latest remarks were encouraging but not conclusive. “A major positive for the market today comes from President Trump’s initiative to improve India-US relations and PM Modi’s positive response. However, from past experience, the market should judge Trump by his actions and not words,” he noted. Vijayakumar added that high valuations across Indian equities, particularly in the broader market, remain a challenge to any strong rally.
He also suggested that while tariffs may be reduced, the overall impact on India could be manageable. “The additional 25 per cent tariffs are unlikely to last long, and the remaining duties are not expected to cause major damage. Ideally, US tariffs on Indian goods should settle around 20 per cent,” he said.
Ajay Bagga, a market veteran, stressed that the key driver for Indian equities will be earnings, not geopolitics. In a LinkedIn post, he wrote: “Trump’s post is a positive, and a follow-through trade deal would be a very strong catalyst. But earnings rising to justify lofty valuations is the essential factor. June may have marked the earnings trough, and we could now be on the cusp of recovery.”
Analysts expect that earnings momentum could pick up from the December quarter, helped by domestic reforms, lower interest rates, and easing global uncertainties. If corporate results improve alongside progress in trade talks, Indian equities could finally break out of the nearly 12-month consolidation phase that has frustrated investors.
For now, Trump’s latest comments on India-US trade negotiations have injected a dose of optimism into the markets. But experts agree the bigger test lies ahead: whether earnings growth can provide the foundation for a lasting rally.
