By Jaspreet Kalra and Bharath Rajeswaran MUMBAI, Feb 3 (Reuters) - India's financial markets rallied sharply on Tuesday after a trade deal that slashed U.S. tariffs on Indian goods to 18% from 50%, a development that investors said removed a key drag on the country's stocks,

The U.S. and India have finalized a trade deal on Monday after months of negotiations, steadying a relationship that had plummeted to its lowest point in decades.

The India–US trade agreement and Union Budget 2026 together send a strong signal of policy continuity and long-term growth intent, said Ajay Garg, Director and CEO of SMC Global Securities.

The US will cut tariffs on Indian goods to 18% after PM Modi agreed to stop buying Russian oil. President Trump called it a historic deal, marking a sharp reset in India-US trade ties.

U.S. Treasury yields were mostly steady on Tuesday as investors digested news that the United States and India have agreed to a trade deal.

India and the US sealed a major trade pact with Washington cutting tariffs on Indian goods to 18%, giving New Delhi a clear edge over China and key Asian export rivals. The deal marks a thaw in ties and is expected to boost Indian exports,

US President Donald Trump announced the trade deal with India on Monday, easing tensions between the world's largest democracy and its top trading partner.

The relationship between India and Canada has been visibly on the mend since Mr. Modi attended the Group of 7 summit in Alberta at Mr. Carney’s invitation in June 2025, shortly before the shock of the American tariffs.