India-US trade deal: Top stocks that will benefit from reduced 18% tariffs - check sector-wise list

India-US trade deal impact on stock market: Reversal of FII outflow, rupee recovering lost ground, general improvement in sentiments towards Indian equities,) return of confidence for FDI, and retracement of India’s underperformance vs. EM peers, etc - these are some of the potential major benefits of the India-US trade deal. US President Donald Trump has announced reducing tariffs on Indian goods to 18% effective immediately.

The stock market has cheered the news, with BSE Sensex and Nifty50, rallying strongly. In a report Motilal Oswal Financial Services (MOFSL) has said that the Indian ‘leverage’ has re-emerged.




The 18% tariff, “not only makes Indian exports more competitive in the US markets but also triggers a chain reaction of positive developments that could enhance the performance of Indian markets,” says MOFSL.

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Top Stocks To Benefit From India-US Trade Deal

According to MOFSL, this is a high-impact development and will have a multi-layered positive effect on the Indian economy, prevailing market sentiments, and sectors exporting to the US, which will benefit from better competitiveness. Key sectoral beneficiaries include Auto Ancillaries, Defence, Consumer, Textiles, EMS, Consumer Durables, IT Services, Financials (second-order beneficiary), and Utility companies.

The agreement is also expected to deliver broad-based gains for both Indian markets and the wider economy. The prolonged uncertainty around the Indo-US trade talks had weighed heavily on sentiment toward India over the past year. With that overhang now removed, several constructive trends could follow, including a potential reversal of foreign institutional investor outflows, a recovery in the rupee, improved overall confidence in Indian equities, renewed momentum in foreign direct investment, and a narrowing of India’s recent underperformance relative to other emerging markets, the report says.

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“Not only will the market respond very positively to the deal announcement in the near term, but this deal will also reset the base for India’s strong performance over a longer time horizon, as we see this event imbued with a structurally “positive allocation effect”. The Indo-US trade relations have been strained since Apr’24, which has soured the FIIs' outlook, as India was seen to have limited leverage with the US. Consequently, India has significantly underperformed its peers by ~40% over the past year, as FIIs withdrew USD22b from the Indian equities since Jan’25. Additionally, the INR depreciated by ~6% against the USD, especially as the dollar index slid. We believe many of these adverse trends are now likely to reverse,” says MOFSL.

The announcement also restores the competitiveness of Indian exports in the US market. While a few advanced economies such as Switzerland, the European Union, the United Kingdom, Japan and South Korea will still enjoy lower tariff rates than India, competitive pressure from these markets is expected to be limited due to differences in their positions along the global value chain and the relatively small overlap with Indian exports.

Crucially, most of India’s direct competitors in the US market now face higher duties This includes major emerging-market exporters such as China, Vietnam, Brazil, Thailand and South Africa, all of which are now subject to steeper tariffs than India.

“With this deal announcement, we believe that the market will now begin to accord correct weightage to the improving trajectory of corporate earnings growth, which has shown successive improvement over the quarters with an improving earnings revision trend. We had expected a 16% YoY growth in MOFSL PAT at the start of 3QFY26, and the results to date have been in line with our estimates. We expect ~12% earnings growth for Nifty over FY25-27E. Valuations for Nifty at 20.4x remain palatable (below the 10-year average of 20.8x), and with the latest turn of events, it has the potential to expand appreciably,” says MOFSL.

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