Explained: Rupee to strengthen, market to surge! Benefits for India from Trump's tariff decision

The day that 1.4 billion people in the country were waiting for, the event that the whole world, not just India, was watching, has finally happened. After speaking with PM Modi on Monday, US President Donald Trump reduced US tariffs to 18 percent. This tariff reduction will bring several benefits to India. The biggest benefit will be an increase in exports. Importantly, India's Finance Minister had recently announced several measures in her budget to counter the US tariffs. This included a package of Rs 10,000 crore for MSMEs to boost manufacturing. The revival of the country's industrial clusters was also mentioned.

India major diplomatic victory on US tariffs and trade

With the removal of these tariffs, India's exports will be strengthened, and the manufacturing sector will also receive a boost. Due to the increased tariffs, the rupee had been continuously depreciating. Now, it will appreciate. Experts estimate that when the currency market opens on Tuesday, the rupee could appreciate by one percent or more. This means that the rupee could strengthen from the 91 level to the 90 level on Tuesday. In the coming days, it could strengthen further to the 88-89 level.

Rupee to strengthen, market to surge

This could also lead to a surge in the stock market. On Monday, the stock market saw a rise of more than 1 percent, or about 950 points. However, since the tariffs were imposed, the Indian stock market has been experiencing significant volatility. Notably, the Indian stock market has seen a considerable decline since the imposition of additional Russian tariffs. The stock market is more than 5 percent below its peak. In this situation, a bullish trend may be observed.

Rupee will strengthen: Since the tariff bomb dropped on India, the condition of the Indian rupee has continuously deteriorated. The rupee's decline was further exacerbated when the US imposed an extra 25 percent tariff on Russian oil purchases. In 2025, the Indian currency saw a decline of more than 5 percent. In the very first month of 2026, the Indian rupee even touched a historic level of 92 against the dollar. Now that a reduction in tariffs has been announced, the rupee may breathe a sigh of relief. According to currency market experts, the rupee could appreciate by more than 1 percent against the dollar on Tuesday.

Stock market will rise: After the reduction in tariffs, the Indian stock market may also see a surge. According to the data, due to the tariffs, the Sensex and Nifty did not see double-digit growth in 2025. Although the Sensex reached its peak level of 86,159.02 points on December 1st, it has been continuously declining since then. Looking at the data, the Sensex is currently more than 5 percent below its peak. However, on Monday, the Sensex saw a rise of more than 1 percent, or about 950 points. After this tariff announcement, the Sensex and Nifty may see a significant surge. Experts estimate that in the month of February, the Sensex and Nifty will not only recover from the more than 5 percent decline, but will also see further gains.

Return of foreign investors: Due to the US tariffs, foreign investors were continuously selling off their holdings in the stock market. In the three months from November to January, foreign investors have withdrawn ₹62,338 crore from the stock market. This is significantly lower than the figure of over ₹1.66 lakh crore seen in 2025, and in January 2026, foreign investors sold shares worth ₹35,962 crore. Following Trump's announcement, a return of foreign investors to the stock market is possible, especially at a time when the Indian government has significantly increased the transaction security tax on investments in futures and options (F&O) in the budget.

Increase in Exports: After the announcement of reduced tariffs, India's exports are likely to increase, particularly to the US market, which has seen a decline in the current financial year. According to data, India's exports in April were $8.4 billion, which decreased to $6.88 billion in December. This indicates a loss. January's data is not yet available. A decline in US export figures might be seen in January, but after the reduction in tariffs, the figures are expected to increase in the coming months.

Increase in FDI: Although the country saw a 73% increase in FDI in 2025, reaching $47 billion, this figure was over $83 billion in the financial year 2021-22. According to UNCTAD data, India's FDI increased by 73% in 2025. Now that US tariffs have been reduced and the prospects for a trade deal between the US and India have significantly improved, expectations for FDI in the country have also risen considerably. This is a positive development for the world's largest economy. The reduction in tariffs and increased trade will boost foreign investors' confidence in India and lead to an increase in FDI.

Summary

The US President has reduced tariffs to 18 percent and also spoken about a trade deal. This decision could bring several benefits to India, including a stronger rupee and a surge in the stock market. Let's give you more detailed information about this.