India–US trade deal brings cheers to markets; Key sectors and stocks in focus
- 3rd February 2026
- 10:30 AM
- 3 min read
Summary
The India–US trade deal has cut US tariffs on Indian goods to 18% from existing 50%, removing a major market overhang. The move restores export competitiveness, eases uncertainty, and puts textiles, auto ancillaries, chemicals, pharma, agriculture and clean-energy stocks in focus as sentiment turns positive.Mumbai | February 3
India and the United States announced a trade agreement that slashes reciprocal tariffs on Indian goods to 18% from 25%, while eliminating the additional 25% duty linked to purchases of Russian crude oil. The deal is effective immediately, US President Donald Trump said after a late-night call with PM Narendra Modi, offering immediate tariff relief to India.
The reset marks a clear shift after months of pressure on Indian exporters, when combined duties had effectively lifted tariffs to as high as 50% on certain trade flows. The deal also includes India’s commitment to increase imports from the US by $500 billion over time and reduce dependence on Russian oil, following the removal of Russia-linked penalties.
Why this is important for Indian markets
Higher tariffs had hurt exports, tightened margins, and added to foreign investor caution. With duties now sharply lower, pricing pressure on exporters eases and earnings visibility improves. The move also removes a key policy risk that had weighed on equities, particularly export-oriented stocks.
Duties are lower than regional peers
At 18%, India’s tariff rate is now below most Asian export economies:
- Bangladesh, Sri Lanka, Taiwan, Vietnam: 20%
- Indonesia, Malaysia, Thailand, Philippines, Pakistan: 19%
- Cambodia: 19%
This materially improves India’s export competitiveness versus peers.
Sectors and stocks to watch after the tariff cut
Textile & apparel stocks back in play
The US is a major destination for India’s textile exports. Lower duties ease margin pressure and restore competitiveness.
Stocks to watch: Gokaldas Exports, KPR Mill, Arvind Ltd, Welspun Living, Indo Count Industries,Kitex garments, Himatsingka seide, Trident ltd, Vardhman Textiles.
Pharma & healthcare exporters gain visibility
High US exposure had weighed on earnings; tariff relief stabilises demand and profitability.
Stocks to watch: Dr Reddy’s Laboratories, Aurobindo Pharma, Cipla
Agriculture & seafood see demand revival
Shrimp and basmati exporters benefit as pricing normalises and volumes recover.
Stocks to watch: Avanti Feeds, Apex Frozen Foods, KRBL, LT Foods
Auto components & engineering turn competitive
Lower tariffs protect margins and reduce cost disadvantages for US-bound supplies.
Stocks to watch: Bharat Forge, Samvardhana Motherson, Sona BLW Precision Forgings
Chemicals regain competitiveness
Chemical exporters with meaningful exposure to the US are expected to benefit from the sharp reduction in tariffs
Stocks to watch: Aarti Industries, Vinati Organics, Navin Fluorine International, SRF, Gujarat Fluorochemicals
Technology & IT services sentiment improves
Not direct tariff beneficiaries, but trade stability and lower protectionism risk support sentiment.
Stocks to watch: TCS, Infosys, HCLTech
PL Capital View
According to Vikram Kasat, Head – Advisory, PL Capital, stocks likely to remain in focus include Bharat Forge, Sona BLW Precision, Shriram Finance, Apar Industries, Waaree Energies, Cummins India, and select Adani Group companies. Marine exporters, leather makers, gems & jewellery players, and select chemical stocks may also see heightened interest.
Big picture
While direct beneficiaries form a smaller slice of market cap, the impact is macro. With trade friction eased between two economies that together account for over 35% of global GDP, the deal supports sustained growth, job creation in labour-intensive industries, and domestic demand a clear positive for Indian markets.
Track the latest India–US trade deal developments with PL Capital.
