US-India trade agreement boosts sentiment, Indian stock market opens sharply higher

Glonghui, February 3rd｜Indian stock markets opened sharply higher, while government bond yields gapped significantly lower at the open, indicating a notable improvement in market sentiment following the trade agreement between India and the United States. The yield on the benchmark government bond maturing in 2035 with a coupon rate of 6.48% was reported at 6.7230%, down from Monday’s 6.7662%, whereas Monday’s closing price had reached its highest level in over a year. The United States has reduced tariffs on Indian export products from 50% to 18%, a move that has boosted the local currency and stock markets previously hit hard by foreign capital outflows. A trader at a private bank stated, “From a fundamental perspective, the agreement and the recovery of the rupee exchange rate are positive developments.” The trader pointed out that the Reserve Bank of India’s policy decisions and supply-demand dynamics will continue to be the main drivers of the bond market. The Reserve Bank of India will announce its policy decision on Friday, following a 500 billion rupee debt buyback scheduled for Thursday.