Whalesbook
Trade Deal Catalyzes Market Surge
The conclusion of a much-anticipated trade agreement between India and the United States on February 3, 2026, injected significant momentum into the shares of India's premier conglomerates. Reliance Industries Ltd. saw its stock climb as much as 7.1% during trading in Mumbai, marking its most substantial advance in two years. Concurrently, Adani Enterprises Ltd. experienced an 11.9% jump, its sharpest rise since November 2024. This rally occurred as the benchmark Nifty 50 index opened higher, with GIFT Nifty futures indicating a strong start, reflecting positive sentiment across Indian equities. The broader market saw the Sensex gain 2.57% on the day, supported by a sector-wide advance in Oil & Gas stocks, which rose by 2.69%.
Strategic Oil Access and Tariff Relief
The core of the accord involved the U.S. President announcing a revised 18% tariff, replacing the previous punitive 50% duties, contingent on India ceasing its purchases of Russian oil. While full details of the pact are still emerging, its finalization removes a significant point of pressure for companies led by Asia’s two wealthiest individuals. For Reliance Industries, the trade deal's implications extend to its strategic energy diversification. The company has been actively exploring the resumption of Venezuelan oil imports since early January 2026, viewing it as a critical alternative supply source. Reliance is reportedly seeking guidance from both governments before finalizing any procurement plans for Venezuelan crude, which offers attractive pricing and margins for its refining capabilities. This strategic shift aims to mitigate the geopolitical volatility surrounding Russian crude supplies.
Legal Undercurrents and Sector Valuation
Simultaneously, for Adani Enterprises, the improved India-U.S. diplomatic climate could provide a more conducive environment for resolving ongoing legal challenges in the United States. The U.S. Securities and Exchange Commission (SEC) is actively seeking assistance to serve complaints related to alleged securities fraud and bribery against Gautam and Sagar Adani, a process that cleared a procedural hurdle last week. The Department of Justice (DOJ) also has an unsealed criminal indictment against the Adani Group. Despite the surge, Adani Enterprises trades at a P/E ratio of approximately 32.92 as of February 3, 2026, significantly higher than its industry peers such as Mysore Petro Chemicals (5.8x) and MSTC Ltd (9.5x). Reliance Industries, with a TTM P/E of around 25.5, also trades above its sector's P/E of 13.75, indicating a valuation premium.
Mitigating Recent Losses and Future Outlook
This sharp rally on Tuesday is expected to offset some of the substantial wealth erosion experienced by the flagship firms earlier in 2026, which had led to an estimated $24 billion decline in their combined net worth. Even with the day's gains, Reliance shares remain down 8% year-to-date. Historically, Reliance stock has shown responsiveness to trade policy news; it had gained 3.22% on February 2, 2026, following prior volatility. Analysts maintain a generally positive outlook on Reliance, with 17 strong buy and 14 buy ratings, though 2 analysts recommend selling. For Adani Enterprises, while specific recent analyst ratings are limited, the group's efforts to resolve U.S. probes and recent strategic moves in defense and aerospace have bolstered investor confidence. The broader market sentiment, influenced by global trends and domestic policy, will continue to shape the trajectory for these Indian industrial giants.