Stock market benchmark indices Sensex and Nifty surged in early trading session on Tuesday after India and the US agreed to a trade deal under which Washington will bring down the reciprocal tariff on Indian goods to 18 per cent from current 25 per cent.

The 30-share BSE Sensex jumped 3,656.74 points to 85,323.20 in opening trade. The 50-share NSE Nifty surged 1,219.65 points to 26,308.05.

Later, both the benchmark indices further extended their winning momentum. The BSE benchmark zoomed 4,205.27 points or 5.14 per cent to 85,871.73. The Nifty jumped 1,252.8 points or 4.99 per cent to 26,341.20.

The cheer in the markets followed US President Donald Trump's announcement of a trade deal with India, months after imposing 50 per cent tariffs on Indian goods in August 2025.

The agreement, unveiled on Trump's social media platform Truth Social, features significant tariff reductions and includes claims that India would halt purchases of Russian oil.

Trump had earlier levied a 50 per cent tariff on India, with 25 per cent linked to crude imports from Russia, as administration officials repeatedly alleged that India's oil purchases helped finance Russia's war against Ukraine.

From the Sensex firms, Adani Ports, Bajaj Finance, Eternal, Bajaj Finserv, InterGlobe Aviation and Reliance Industries were trading sharply higher in the range of 7.2-3.7 per cent.

ITC emerged as the only laggard from the blue-chip pack.

"The dramatic announcement of the long-awaited US-India trade deal and the US decision to cut tariffs on India from 50 per cent to 18 per cent is a game changer for the Indian economy and stock markets.

"The combination of the US-India trade deal, the EU-India trade deal and the growth-oriented Budget will boost the market sentiments and the animal spirits in the economy. The stock market, anticipating and discounting these developments will boom," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

In Asian markets, South Korea's Kospi rebounded and jumped 5 per cent. Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index were also trading higher.

US markets ended higher on Monday.

Foreign institutional investors offloaded equities worth Rs 1,832.46 crore on Monday, while Domestic Institutional Investors (DIIs) bought stocks worth Rs 2,446.33 crore, according to exchange data.

Brent crude, the global oil benchmark, dipped 0.51 per cent to USD 65.96 per barrel.

On Monday, the Sensex jumped 943.52 points or 1.17 per cent to settle at 81,666.46. The Nifty climbed 262.95 points or 1.06 per cent to end at 25,088.40.