The long wait for clarity on India-US trade relations ended with a sudden late-night announcement (Monday, February 2). The United States agreed to cut reciprocal tariffs on Indian goods to 18% from 25% and also removed the additional 25% punitive duty linked to India’s Russian oil trade. Motilal Oswal, in its latest report has highlighted the key beneficiaries post the Indo-US trade deal.
As per the brokerage house, this deal effectively means a sharp reduction in the overall tariff burden. The brokerage believes this single development has the potential to reset market sentiment, earnings expectations and sectoral leadership in the months ahead.
A tariff cut that changes the math for Indian exporters
As per the brokerage report, this sharp cut directly improves pricing power for Indian companies in the US market. Lower duties mean Indian products can compete better with peers from countries such as Bangladesh, Vietnam and China, especially in labour-intensive and manufacturing-led segments.
According to the brokerage report, this development is “high-impact” and is likely to have a layered effect across markets, corporate earnings and sector-specific demand.
Markets refocus on earnings growth
With the tariff overhang easing, Motilal Oswal believes investor attention will now shift back to corporate earnings. The brokerage noted that earnings growth has been improving quarter after quarter. This is supported by better revisions and stable demand trends.
As per the brokerage report, “we had expected a 16% year-on-year growth in profit after tax at the start of the third quarter of FY26, and results so far have been in line with our estimates.”
Motilal Oswal expects around 12% earnings growth for the Nifty index over FY25-FY27. Valuations, according to the brokerage report, remain reasonable, with the Nifty trading at 20.4 times earnings, slightly below its 10-year average of 20.8 times. The brokerage added that “with the latest turn of events, it has the potential to expand appreciably,” supported by steady earnings growth.
Tech stocks, electronics, cables benefit from sentiment shift
In technology services, Motilal Oswal believes the trade deal supports sentiment recovery. As per the brokerage report, “deal momentum from US clients is expected to improve,” after a period marked by visa-related concerns and negative commentary around outsourcing.
Electronics manufacturing services companies such as Avalon Technologies and Dixon Technologies also feature in Motilal Oswal’s beneficiary list. According to the brokerage report, Avalon derived about 57% of its sales from the US in FY25, while Dixon could see new export opportunities, especially in mobile manufacturing.
Cables and wires players like Polycab India and KEI Industries are also in focus. The brokerage report noted that these companies may benefit from market share expansion and rising orders, particularly linked to data centre projects in India, where project business forms a significant part of demand.
Auto ancillaries and manufacturing get a boost
One of the key beneficiaries highlighted by Motilal Oswal is the automobile ancillary space. Companies such as Bharat Forge and Balkrishna Industries stand to gain from better access to the US market.
As per the brokerage report, certain non-automobile exports are not covered under the US Section 232 tariffs, allowing companies like Bharat Forge to benefit more directly.
Balkrishna Industries, which derives a meaningful portion of revenue from the US, could also see a positive impact. According to the brokerage report, about 14% of its revenue is linked to the US market, and lower tariffs improve margins and order competitiveness.
Textiles regain lost competitiveness
The textile and apparel segment is seen as one of the biggest winners from the deal. Motilal Oswal pointed in its report that companies such as Raymond Lifestyle, Indo Count Industries, Welspun Living, Gokaldas Exports and Kitex Garments have high exposure to the US market.
According to the brokerage report, these companies earn anywhere between 65% and 90% of their revenue from the US. Lower tariffs help Indian exporters regain ground lost to other Asian competitors.
In the case of Kitex Garments, the brokerage noted that nearly 90% of revenue comes from the US.
Consumer and consumer durable names in focus
Motilal Oswal also highlighted consumer-facing companies as indirect beneficiaries. LT Foods, which earns around 41% of its revenue from the US, could see margin improvement of 100 to 200 basis points, according to the brokerage report.
In consumer durables, Blue Star is expected to benefit through improved competitiveness and potential market share gains.
Defence, banks and utilities as second-order plays
While defence exporters currently have limited exposure to the US and Europe, Motilal Oswal sees long-term opportunity opening up. According to the brokerage report, defence component manufacturers could benefit as export channels expand over time.
Financials are described as second-order beneficiaries. Banks such as ICICI Bank, HDFC Bank, State Bank of India, Federal Bank and Bandhan Bank may see easing pressure on small and medium enterprise borrowers. As per the brokerage report, concerns around credit growth and asset quality linked to tariff uncertainty are likely to soften.
In utilities, Waaree Energies is highlighted due to its export exposure. According to the brokerage report, 15 to 20% of its revenue comes from US exports, which could benefit directly from lower tariffs.
Conclusion
Overall, the brokerage house believes that the Indo-US trade deal removes a major uncertainty that had been weighing on export-oriented sectors. As per the brokerage report, the balance between valuations and earnings growth now look more stable.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.