India-US trade deal sparks sharp rally in export stocks as tariff cuts improve competitiveness
Export-oriented Indian stocks rallied strongly on Wednesday after the India-US trade deal reduced US tariffs on Indian goods to 18%, a move investors believe could materially improve the earnings outlook for several export-heavy sectors.
Shares of companies with meaningful exposure to the US market — particularly textiles and seafood exporters — extended gains for a second straight session, with some counters rising up to 18–20% intraday. The rally reflects renewed optimism that lower tariffs will restore India’s cost competitiveness against other Asian exporters.
Market participants said the tariff reset changes near-term sentiment as well as medium-term earnings assumptions for exporters dependent on US demand.
Export-focused companies lead gains as investors reprice earnings outlook
Gokaldas Exports emerged as one of the biggest gainers in the session. The stock surged about 20% to an intraday high of ₹832.85 on the NSE after opening with a gap-up of over 12%. The stock has climbed more than 41% over two trading sessions, underscoring how quickly sentiment has shifted.
Other textile and garment exporters also advanced:
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Kitex Garments rose around 12%
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Indo Count Industries jumped roughly 11%
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KPR Mill gained about 2.6%
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Arvind moved up over 2%
Investors appear to be recalibrating revenue and margin expectations, especially for firms with established US buyer relationships.
Also Read : SEBI Signals No Immediate F&O Curbs — Is Regulatory Pressure Easing for Markets?
Shrimp exporters join rally as US demand outlook brightens
The rally was not limited to textiles. Seafood exporters, which rely heavily on the US market, also attracted buying interest.
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Avanti Feeds gained around 12%
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Apex Frozen Foods climbed about 10%
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Coastal Corporation hit its 5% upper circuit
The US remains a crucial destination for Indian shrimp exporters. Apex Frozen Foods derived 53% of its export sales from the US in FY25, while North America accounted for 65.4% of Avanti Feeds’ total sales in the first quarter of FY25. These exposures make tariff changes directly relevant to revenue visibility.
Here’s what happened today and why traders reacted
Traders responded to a clear catalyst: improved price competitiveness for Indian exports in the US market.
Key reasons behind the reaction include:
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Tariff reduction to 18% from earlier higher levels
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Competitive advantage over Asian peers facing 19–30% tariffs
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Expectation of order flow recovery from US buyers
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Potential margin expansion for exporters
Short-term traders chased momentum in high-beta export counters, while some institutional investors reassessed medium-term earnings potential.
A Mumbai-based trader said, “When tariffs drop meaningfully, even stable volumes can translate into better margins. The market quickly discounts that.”
Tariff reset seen as structural positive for textiles
Brokerage ICICI Securities described the tariff change as potentially transformative for the sector. The firm noted that reciprocal tariffs have been cut from 50% earlier to 18%, which could offer a multi-year advantage.
“A reduction in reciprocal tariffs from 50% to 18%, along with recent trade deals with the UK and the European Union, is expected to provide a multi-year advantage to the textile sector by boosting earnings and cash flows through an expanded export base and capacity additions,” ICICI Securities said.
The brokerage added that India now holds a relative tariff advantage over competing Asian exporters, improving its positioning in global sourcing chains.
Why the India-US tariff gap matters for global sourcing
Global apparel and food buyers often allocate orders based on a mix of cost, reliability and trade policy. Even small tariff differences can shift sourcing decisions across countries.
With India now facing lower tariffs than some Asian peers, exporters could:
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Gain incremental order share
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Improve capacity utilisation
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Negotiate better pricing with buyers
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Strengthen long-term supply contracts
However, actual gains will depend on demand conditions in the US and the ability of Indian firms to scale efficiently.
What this move means for investor portfolios
For investors, the rally highlights how policy developments can quickly influence sectoral valuations.
Portfolio impacts may include:
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Re-rating of export-heavy stocks
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Increased volatility in textile and seafood counters
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Tactical opportunities for short-term traders
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Medium-term allocation shifts toward exporters
That said, analysts caution that tariff benefits must translate into sustained order flows and profitability to justify sharp stock price moves.
What impacted the market today and what to watch next
The primary driver today was the tariff differential advantage created by the trade deal. Sentiment was also supported by the perception that India is strengthening trade relationships with key markets.
Investors will now monitor:
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Export order trends in coming quarters
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Management commentary on demand visibility
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Currency movements affecting export realisations
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Further trade policy developments
While the immediate reaction has been positive, market participants say durability will depend on execution and global demand conditions.
For now, the India-US trade deal has provided a tangible catalyst for export-oriented stocks, turning a previously pressured segment into one of the market’s strongest performers this week.
