Indian stock markets are experiencing a boost, with the BSE Sensex increasing by 0.37% and the NSE Nifty rising by 0.47% on May 5, 2025 [26]. This surge is attributed to strong foreign investments and growing optimism about a potential trade deal with the United States [26]. This positive market reaction reflects strong investor confidence in India's economic outlook [26].
The Indian rupee has also strengthened, appreciating by 0.40% against the US dollar, supported by a stronger Chinese yuan and lower crude oil prices [16, 25]. The 10-year government bond yield has decreased by 3 basis points to 6.3247%, aligning with expectations of further bond purchases by the Reserve Bank of India (RBI) [3, 32]. Stable overnight swap rates suggest a steady interest rate environment [32].
India and the US are in discussions for a Bilateral Trade Agreement, with aims to finalize the first phase by Fall 2025 [10, 11]. The US seeks tariff reductions and regulatory overhauls that could benefit American firms [5]. India, on the other hand, is pushing for concessions in labor-intensive sectors and easier visa regimes [11]. Progress in these trade talks, along with stable oil prices and a stronger rupee, could further bolster India's economic stability and support future growth [10, 11].