India-US trade deal: Indian stock markets are likely to open higher on Monday after a surge in US markets on Friday after India and the United States released a joint statement on Friday, February 6, 2026, outlining a framework for the Interim Trade Agreement (ITA) after the announcement of the India-US trade deal on Monday last week.
The ITA will serve as the first step toward a broader Bilateral Trade Agreement (BTA), offering near-term visibility on tariffs while setting the stage for deeper trade integration.
For investors, the announcement has sharpened focus on export-oriented and manufacturing-linked sectors that stand to gain from improved access to the US market.
Under the framework, the US will apply an 18% reciprocal tariff on select Indian goods, including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain machinery. At the same time, the agreement outlines the potential removal of reciprocal tariffs across a wider set of products, improving competitiveness for Indian exporters. The deal also signals a shift from uncertainty-driven trade headlines to a more rules-based framework, which markets typically reward with higher earnings visibility.
What changed since Trump–Modi announcements?
The joint statement adds legal and policy clarity that was missing from earlier social media announcements. According to JM Financial, Indian exports will receive preferential tariff rate quotas for automotive parts and tariff removals on specific aircraft components. In return, the US gains tariff reductions across several sectors, including food and agricultural products, along with long-term commitments from India involving $500 billion in planned purchases over five years.
Crucially, the US has legally withdrawn the additional 25% ad valorem duty under Executive Order 14329, effective February 7, 2026. The executive order also stated that India has committed to ceasing direct and indirect imports of Russian oil, while expanding purchases of US energy products. The US retains explicit rights to monitor compliance and re-impose duties if commitments are breached.
India, for its part, clarified that the agreement involves selective liberalization rather than blanket zero tariffs, tempering expectations of across-the-board duty elimination. Another key element is the targeting of India’s non-tariff barriers, including restrictions on medical devices and ICT goods.
While near-term trade visibility has improved meaningfully, experts cautioned that medium-term risks remain policy-driven, depending on execution and geopolitical developments.
What should investors do?
The sectoral implications are largely positive. Electronics exports remain largely unaffected, having already benefited from exemptions under earlier tariff regimes. Incremental beneficiaries from improved clarity include diamonds and jewellery, textiles, machinery, chemicals and automobiles, where tariff reductions materially enhance competitiveness. Pharmaceuticals and aircraft components continue to enjoy near-zero duty access, preserving their strong US linkage.
Axis Securities said the agreement enhances earnings visibility and supports valuation re-rating, particularly for export-oriented and capex-linked sectors, while reinforcing India’s positioning as a relatively safe haven among emerging markets.
“Sustained execution could meaningfully enhance India’s export competitiveness, manufacturing depth, and global integration. Investors should focus on companies with strong US exposure, scalable manufacturing capabilities, regulatory compliance strength, and balance-sheet resilience to fully capture the opportunity,” said Axis.
Stocks to buy today
Axis Securities’ top positive plays (coverage) 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.
Its non-coverage ideas include Sun Pharma, Divi’s Laboratories, KPR Mill, Gokaldas Export, Indo Count Industries, SRF, UPL, Bharat Forge, Samvardhana Motherson, Dixon Technologies, Syrma SGS Technology, Sona BLW, LT Foods and Avanti Feeds.
SAMCO Securities highlighted a similar opportunity set, naming Goldiam International, Indo Count Industries, Gokaldas Exports, Kitex Garments, Sona BLW Precision, Avalon Technologies, Bharat Forge, KPR Mills, PCBL Chemical, Welspun Living, Apar Industries and Avanti Feeds as key beneficiaries.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
