The US trade deal should reduce India's current account deficit, stabilise the rupee, and enhance the country's vulnerability to global shocks over time,
a report showed on Tuesday. The US has decided to reduce the reciprocal tariff on Indian goods to 18 per cent from the earlier 50 per cent. The deal is structurally positive for India's medium-term growth and external stability and particularly positive for export-oriented sectors with meaningful exposure to the US market, Axis Securities said in its report. Improved market access and tariff certainty are likely to boost exports, support manufacturing investment, and strengthen inflows of foreign direct investment (FDI), and sectors such as textiles, chemicals, pharmaceuticals, auto ancillaries, IT services, and select industrials stand to benefit from improved market access, tariff rationalisation and greater supply-chain certainty. Over time, higher order inflows, better capacity utilisation and improved earnings visibility could support sustained growth and valuation re-rating for these sectors, said the report. “India–US trade relations are entering a constructive phase after a period marked by tariff disputes, regulatory frictions, and global supply-chain realignments. With both economies seeking to de-risk supply chains, counter China-centric dependencies, and deepen strategic ties, the proposed US–India trade deal is shaping up as a pivotal catalyst,” it noted.
Indian markets soar on trade deal euphoria
India's financial markets rallied sharply on Tuesday. The Sensex jumped nearly 3,500 points, or 4.4%, to around 85,300, while the Nifty 50 surged about 1,200 points, or 4.7%, crossing the 26,300 mark in early trade. The broader market also joined the rally, rising more than 3%. The development lifts a key overhang over the country's stocks, bonds and currency, according to investors.
For India, the deal aligns well with its manufacturing push (PLI schemes), export diversification strategy, and ambition to move up the global value chain, while for the US, India offers a large, reliable market and a strategic manufacturing alternative in critical sectors.
According to the report, for equity markets, the deal enhances earnings visibility, supports valuation re-rating — particularly for export-oriented and capex-linked sectors — and reinforces India’s positioning as a relatively safe haven among emerging markets.
“The US–India trade deal should be seen as a medium-term structural positive rather than a short-term trigger. 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,” the report suggested.
(With agency inputs)
