India US trade deal stocks: impact on Indian stock market

India US trade deal stocks became a key focus after India and the United States announced a bilateral trade agreement on February 2, 2026. The announcement followed direct discussions between President Donald Trump and Prime Minister Narendra Modi. The agreement reduced reciprocal tariffs on Indian exports to the US from 25% to 18% and removed additional penalties linked to earlier policy disputes.

The development marked a shift in India–US trade relations and drew attention from Indian equity markets. Market participants began assessing how the agreement could influence export-linked sectors, cross-border trade flows, and listed companies with US exposure. This article explains the structure of the deal and outlines how it connects to the Indian stock market in a factual and neutral manner.

Background of the India–US trade agreement

India–US trade relations faced strain during the previous year. The US imposed higher tariffs on several Indian exports. Some duties increased sharply and were tied to geopolitical concerns, including India’s energy imports from Russia. These measures raised costs for Indian exporters and added uncertainty to trade flows.

The February 2026 announcement signaled a reset. Both governments confirmed that tariffs were addressed, although the full legal text of the agreement had not yet been released at the time of the announcement. Public statements described the deal as part of a broader effort to stabilise bilateral trade relations.

  

Key terms of the trade deal

The agreement contains several elements that are relevant to Indian businesses and financial markets.

Tariff adjustments

• US reciprocal tariffs on Indian exports reduced from 25% to 18
• Removal of an additional penalty that had applied to certain Indian goods
• Immediate cost relief for exporters selling into the US market

Market access commitments

• India agreed to progressively reduce tariffs and selected non-tariff barriers on US goods
• Sensitive domestic sectors, such as agriculture and dairy, were excluded from near-term liberalisation

Purchase commitments

• India committed to large-scale purchases of US goods across multiple sectors
• Reported areas include energy, technology, agriculture, and coal

These points form the commercial foundation of the agreement and explain why equity markets tracked the announcement closely.

Link between the trade deal and Indian stock market sentiment

The Indian stock market typically reacts to changes in trade policy that affect export visibility and regulatory certainty. The trade agreement influenced sentiment through several channels.

Export competitiveness

Lower US tariffs reduce landed costs for Indian products. This change improves pricing competitiveness for exporters operating in the US market. Listed companies with significant US revenue exposure are directly affected by such tariff adjustments.

Earnings visibility

Stable trade rules help firms plan production and contracts. Reduced uncertainty can support more predictable revenue flows for companies engaged in cross-border trade.

Policy clarity

The removal of punitive measures reduced policy-related risk. Markets often respond positively to clarity, even when full implementation details are pending.

These factors explain why the agreement was closely followed by equity investors, particularly those tracking export-oriented sectors.

Sectors linked to India US trade deal stocks

Several sectors were highlighted due to their exposure to US markets and global supply chains. The following overview summarises the main areas connected to the agreement.

Information technology services

Indian IT firms generate a large share of revenue from US clients. While services are less affected by tariffs than goods, improved bilateral relations support contract continuity and client confidence.

Pharmaceuticals

Pharmaceutical exports to the US form a significant part of India’s trade basket. Lower tariffs and stable access conditions support manufacturing-linked companies listed on Indian exchanges.

Auto components and engineering goods

These sectors supply parts and equipment to US manufacturers. Tariff reductions directly affect pricing and margins for exporters.

Textiles and apparel

Textile exporters faced higher duties during the period of trade tension. The revised tariff structure reduces cost pressure on shipments to the US.

Comparison: trade conditions before and after the agreement