New Delhi, Feb 3 (.) Indian equity markets are poised for a powerful rally on Tuesday, with benchmark indices expected to open near record territory after New Delhi and Washington finalized a trade agreement that slashes tariffs on Indian exports to 18 percent—a move investors see as clearing a major overhang on sentiment.

The deal comes after months in which trade-related uncertainty weighed heavily on Indian stocks, contributing to their relative underperformance compared with other Asian and emerging-market peers over the past year.

Early indicators point to a sharp gap-up opening. Gift Nifty futures were trading around 26,166 as of 8:54 a.m. local time, suggesting the Nifty 50 is set to open roughly 4 to 5 percent higher than Monday’s close of 25,088.4.

Gift Nifty is a US dollar-denominated futures contract that tracks India’s Nifty 50 index and is widely used as a proxy for offshore investor sentiment ahead of the domestic market open.

. JRC