Nifty 50 Eyeing Breakout as India and New Zealand Announce Free Trade Deal

The Nifty 50 is trading significantly higher, up 0.8% at 26,175.05, fueled by the announcement of a free trade agreement (FTA) between India and New Zealand. The trade pact is anticipated to boost bilateral trade and investment, positioning the index for a potential breakout.

Resistance for the Nifty 50 has been stubborn at 26,200 during recent attempts higher, despite a high of 26,325.80. Bulls have been looking for something substantial to support a firm break, with today's news potentially giving something to rally behind.

The newly finalized FTA, expected to be signed in the first half of next year after legal reviews, aims to eliminate or reduce tariffs on a substantial portion of goods traded between the two countries. New Zealand’s Trade and Investment Minister Todd McClay stated that the agreement will remove or lower tariffs on 95% of New Zealand’s exports, with nearly 57% of exports becoming duty-free in India from the outset.

New Zealand has also committed to investing $20 billion in India over the next 15 years, alongside provisions for the mobility of professionals, skilled labor, and students from India to New Zealand. India has secured zero-duty access to the New Zealand market for all its exports, including textiles, apparel, leather, footwear, marine products, gems and jewelry, handicrafts, engineering goods, and automobiles. India’s Commerce Minister Piyush Goyal highlighted the agreement as an opportunity to build trade around people and launch new opportunities for Indian businesses and youth on a global scale.

In return, India will eliminate tariffs on sheep meat, wool, coal, and most forestry and wood exports. New Delhi will also allow duty-free access for dairy and other food ingredients intended for re-exports. To safeguard domestic interests, India has excluded dairy, coffee, milk, cream, cheese, yoghurts, whey, caseins, onions, sugar, spices, edible oils, and rubber from the agreement’s market access provisions.

Ranjeet Mehta, CEO of PHDCCI, noted that the FTA would provide policy certainty and reduce input costs for manufacturing, fostering long-term economic resilience. Bilateral merchandise trade between the two countries stood at $1.3 billion in 2024–25, while total trade in goods and services amounted to $2.4 billion in 2024. India’s commerce ministry anticipates that the FTA will establish a stable framework to unlock the full potential of the bilateral relationship.

This FTA represents India’s third trade deal this year, following agreements with the UK in July and Oman earlier this month. The agreement includes provisions to reduce tariffs, ease regulations, and boost collaboration in goods, services, and investments between India and New Zealand. India will benefit from zero-duty export access for all its products to New Zealand, while New Zealand will receive market entry and tariff concessions for approximately 70% of India's tariff lines over time, covering 95% of New Zealand's exports.

Sectors in India such as textiles, engineering goods, and seafood are poised to benefit significantly from the agreement, while New Zealand expects gains in horticulture, wood, wool, and coal exports. New Zealand officials have expressed optimism that this deal opens Indian markets previously inaccessible to any country, with ambitions to double the bilateral trade volume within five years.

Today's market response, with the Nifty 50's rise to 26,175.05, reflects the positive sentiment surrounding the FTA. The markets are pricing in the potential for increased trade and investment flows, which could positively influence economic growth and corporate earnings in both India and New Zealand. The FTA marks a significant step in strengthening bilateral relations, and the initial market reaction suggests confidence in the anticipated economic benefits.