Rs 3 lakh crore added! Sensex ends 487 pts higher, Nifty tops 25,300; India-EU trade pact among key factors behind today's rally

Indian equities ended the session on Wednesday higher, with the Sensex and Nifty extending ‍gains from the previous day as a landmark trade agreement between India and the European Union lit a fire under risk appetite and pushed benchmark indices deeper into record territory. A supportive global backdrop amplified the move, sending investors scrambling to add exposure after gains in the previous session.

The BSE Sensex climbed over 600 points to the day's high of 82,503, while the NSE Nifty 50 advanced over 150 points to rise above the 25,350 mark.

At the end of the session, the Sensex closed 487.20 points or 0.60% higher to end at 82,344.68, while Nifty ended at 25,342.75, higher by 167.35 points or 0.66%.


The surge added Rs 2.9 lakh crore to investor wealth, taking the total market capitalisation of BSE-listed companies to Rs 456 lakh crore, reflecting the scale of the optimism sweeping through Dalal Street.

Here are the key factors that drove the stock market higher today:

1) India-EU trade deal

Stocks drew their primary impetus from a long-awaited trade pact between India and the European Union, announced on Tuesday, that aims to sharply lower tariffs on most goods and deepen economic ties between the two regions. The agreement is designed to boost two-way trade and reduce dependence on the United States amid escalating global trade tensions.

Under the deal, tariffs will be eliminated or reduced on 96.6% of traded goods by value, a move the EU said could double its exports to India by 2032 and save European companies 4 billion euros ($4.75 billion) in duties. The EU will cut tariffs on 99.5% of goods imported from India over seven years, with duties falling to zero on Indian marine products, leather and textile goods, chemicals, rubber, base metals, and gems and jewellery, according to India’s trade ministry.

Agriculture-linked products such as soya, beef, sugar, rice and dairy have been excluded from the agreement. The two-decade-old negotiations gained fresh momentum after Washington imposed a 50% tariff on some Indian goods and as U.S. allies pushed back against President Donald Trump’s tariff threats and his bid to take over Greenland.

"Any news or event that triggers short covering can lead to a rally in the market. After the India-EU trade deal, which is a big long-term positive, investors are now focused on the Union Budget to be presented on Feb first," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

2) Rupee strength

Domestic equities also drew support from a firmer rupee, which rose 11 paise to 91.57 against the U.S. dollar in early trade on Wednesday, extending relief seen in the previous session after renewed weakness in the greenback.

The rupee’s advance followed a prolonged period of pressure, with a softer dollar easing one-sided demand that had weighed on the currency in recent weeks. Sentiment turned after U.S. President Donald Trump brushed off concerns around the dollar’s sharp decline, a remark that traders interpreted as a green light to press bearish positions.

3) Dollar index at 4-year low

The dollar index slid to a four-year low on Tuesday, compounding losses after falling nearly 2% last week. It has already shed another 1.5% this week, providing emerging-market currencies, including the rupee, a much-needed breather and adding to the positive undertone in Indian equities.

The dollar index, which measures the U.S. currency against six major rivals, was 0.22% higher at 96.114 after slipping over 1% in the previous session as it hit a ‌four-year low of 95.566.

4) Supportive global cues

Indian markets also took comfort from a firmer global backdrop, with risk sentiment improving across Asia after signs of easing trade tensions. U.S. President Donald Trump said the United States and South Korea would work out a solution, walking back from an earlier threat to raise tariffs on imports from the Asian nation to 25%.

Asian equities responded positively, with MSCI’s broadest index of Asia-Pacific stocks outside Japan rising 0.9% ahead of the U.S. Federal Reserve’s policy decision later in the day. The move was underpinned by a sharp slide in the U.S. dollar, which sank to a four-year low, reinforcing risk-on positioning across global markets and lending support to emerging-market assets, including Indian equities.

5) Technicals flash bullish reversal signals

Technical factors also played a role in underpinning sentiment, with chart patterns pointing to a strengthening uptrend after a volatile previous session. The benchmark indices staged a sharp recovery from intraday lows in the previous, supported by buying interest near key technical levels, reinforcing confidence among short-term traders.

The benchmark indices witnessed a volatile trading session in the previous session, said Shrikant Chouhan, Head Equity Research, Kotak Securities, adding that "technically, after an early morning intraday dip, the market took support near 24,900/81000 and bounced back sharply. From the day's lowest level, the market rallied over 300/950 points. On daily charts, the index has formed a long bullish candle, and on intraday charts, it has formed a promising reversal pattern, which is largely positive."

Chouhan added that support for the Nifty is seen at 25,000 and 24,900, while resistance is placed at 25,200, with a breakout potentially opening the door to higher levels.

Echoing the constructive technical view, Anand James, Chief Market Strategist, Geojit Investments, said, "Direct rise above 25180 has signalled a reversal up move aiming 25800, with intermediate challenges seen near 25580. Alternatively, inability to clear 25400 will have to be treated with caution. We will however, wait till a slippage past 25080 to switch sides, but a collapse is less likely today."