Indian stocks surged on Tuesday, with the benchmark Nifty 50 closing in on record levels.
Donald Trump announced on Monday a trade deal with India that cuts US tariffs on Indian goods to (18% from 50% previously), in exchange for India halting its purchases of Russian oil and lowering its trade barriers.
At the start of last year, India appeared to be in pole position to sign a trade agreement with the United States, given the good relationship between Narendra Modi and Donald Trump during his first term.
However, with India refusing to meet Washington 's demands, talks got bogged down. India even took a stray hit in August when Donald Trump added 25% in tariffs (on top of the 25% reciprocal duties) to punish India 's purchases of Russian oil.
This backdrop weighed on the performance of Indian equities. In 2025, the Nifty 50 (+11%) clearly underperformed the MSCI Emerging Markets (+31%).
Although tariffs do not explain everything. Indian stocks had logged several years of strong gains, and valuations were comparable to those on Wall Street. At the same time, the rest of the emerging markets - led by China - were rather neglected by investors.
So there was a kind of rebalancing last year. Investors took profits on India to reposition in China, for example. Still, over five years, Indian stocks remain well ahead.
Five-year performance of the Nifty 50 and the MSCI Emerging Markets. Source: MarketScreener
