“This is a big boost to investor sentiment,” said Jefferies equity analyst Mahesh Nandurkar. “The key beneficiaries should be auto suppliers, solar power manufacturers, chemicals, textiles and Adani Group companies.”FII flows back
The deal is expected to lead to an immediate revaluation of companies directly or indirectly affected by high US tariffs, including banking, IT services, pharmaceuticals, industrials (particularly energy transmission and distribution equipment and cable and conductors), defense, textiles and chemicals.
From a sectoral perspective, export-oriented segments such as IT services, pharmaceuticals, specialty chemicals, automotive accessories and select engineering goods will benefit the most, analysts say. Lower tariff barriers improve the price competitiveness of Indian companies in the US market, which remains India’s largest export destination. Over time, this could translate into better order inflow, margin stability and higher occupancy rates.
Axis Securities highlighted that “the deal enhances earnings visibility, supports valuation reappraisal – especially for export-oriented and capital investment-linked sectors – and strengthens India’s positioning as a relative safe haven among emerging markets.”
Which sectors will benefit from this?
Nuvama noted that labor-intensive sectors such as textiles and gemstones/jewelry will clearly benefit. “It is these segments that will bear the brunt of Trump’s 50% tariffs (pharmaceuticals, electronics etc. were largely exempt from Trump tariffs),” the brokerage said, adding that this is not only a boost to exports but also to employment generation in India.
The trade deal is also expected to increase capital flows into India, improving the country’s balance of payments. “Expect the INR to rise, which has been underperforming EM FX for over a year. This will also help improve domestic liquidity conditions,” Nuvama said.
Top Stock Picks After India-US Trade Deal
Jefferies has added FII favorite Eternal to its model portfolio, while also adding metals and trimming IT exposure. Stocks with significant exposure to the US include auto components companies like Sona Comps and Bharat Forge, chemicals companies like Navin, PI Industries and SRF, solar players like Waaree, Premier Energies and Emmvee, and textile company Welspun Living.
Axis Securities’ top positive businesses include Dr Reddy’s Laboratories, Lupine, Aurobindo Pharma, Aarti Industries, Pitti Engineering, Kirloskar Brothers, Welspun Living, Sansera Engineering, Steel Strip Wheels, Infosys, HCL Tech and LTI Mindtree. Choices not covered include Sun Pharma, Divis Lab, KPR Mill, Gokaldas Export, Indo Count Industries, UPL, Bharat Forge, Samvardhana Motherson, Dixon Technologies and Sona BLW.
Sectors that could benefit include those with high financial stakes such as real estate, telecom, transport, financial services and healthcare, as well as those where the FII’s overweight/underweight position is at its weakest since September 2018, such as capital goods, financial services, IT services and energy companies, Antique said.
Nuvama’s direct beneficiaries include cables and wires, new energy and chemicals, while indirect players include interest rate sensitive sectors such as real estate and NBFCs, as well as high FII share stocks such as private banks.
“The market is expected to widen the gap as there are many short positions in the system that will be eliminated. But we need to look for a new long build to sustain the trend,” said Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities.
Sheth also warned against expecting miracles: “You should also remember that exports to the US are a small part of our $4 trillion GDP. So yes, the trade deal is good for the economy and markets in the short term, but you shouldn’t expect miracles from it.”
Axis Securities emphasized that the deal “should be viewed as a structurally positive medium-term impact rather than a short-term trigger,” and advised investors to focus on companies with strong US exposure, scalable production capabilities, strong regulatory compliance and balance sheet resilience to fully capitalize on the opportunities.
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