India-US trade: What’s next for Indian stocks? : July 5,2025
India-US trade agreement: Investors are worried as the US tariff pause’s July 9 deadline draws near. Foreign investment and the Indian stock market may benefit from a favorable trade agreement, but volatility may result from unresolved tariff issues.
India-US trade deal: Investors have largely stayed out of the market, not just in India but throughout the world, as the 90-day tariff respite set by US President Donald Trump approaches its expiration date.The Indian stock market fell 0.7% for the week as it entered a consolidation mode due to uncertainty.
Piyush Goyal,the minister of commerce,has made it clear that India will only sign a trade agreement that is “fully finalised,properly concluded, and in the national interest”and will not do so under duress.
The 90-day period during which the Trump tariffs placed on dozens of nations, including India, were suspended ends on July 9. A 26% extra import tax on Indian goods was announced.
According to a PTI report,an official stated that the Indian team has returned from Washington following discussions with the United States regarding an interim trade agreement. However, the talks will continue because there are still difficulties in the auto and agribusiness sectors that need to be handled. According to sources, India has voiced concerns about a 25% tariff on the automobile industry and a 50% charge on steel and aluminum products.
“As signs from both sides indicate a deal is within approach, the Indian equity market is watching the US-India trade talks with increasing anticipation. According to Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group, “confidence that a resolution will emerge before the July 9 deadline has increased due to the US’s temporary pause on tariffs and constructive dialogue.”
According to experts,the following industries stand to benefit from a favorable trade agreement: IT,pharmaceutical,auto components, electronics, and textiles.
According to Hajra,a breakthrough may strengthen interest from international investors in Indian stocks and be a huge boon for India’s export industries,especially IT,pharmaceuticals,and auto components.
In the meantime,Harshal Dasani,Business Head at INVasset PMS,thinks that better market access and tariff reductions will certainly have a significant positive impact for electronics,pharmaceuticals,and textiles.
He noted that there are still issues facing the dairy and agriculture industries,which could be influenced by the current tariff systems.
With favorable trade conditions, India’s textile exports to the US, which were estimated to be worth $9.7 billion in 2023, may increase much more. In a similar vein, the pharmaceutical industry, which accounts for around 31% of its exports to the United States (about $8 billion), stands to benefit greatly from increased access. The electronics industry has grown significantly as well; in 2023 alone, shipments to the US topped $6.6 billion.
Furthermore, the trade agreement may boost FDI inflows, which increased by 14% in FY 2024–2025 and primarily benefited the services sector. India would be positioned as a more alluring investment destination due to the possibility of expanded market access and improved trade relations,” Dasani continued.
What possible effects would the trade agreement have on the Indian market?
A successful trade agreement may increase the trust of foreign investors even more, which would increase capital inflows and strengthen the Indian Rupee.
On the other hand, there may be short-term market volatility if the agreement doesn’t live up to expectations. “Export-driven sectors, particularly textiles and pharmaceuticals, might face hurdles due to unresolved tariff issues,” Dasani stated.Additionally, he thinks that any geopolitical problems resulting from the conditions of the transaction might cause market uncertainty globally, which might lower investor sentiment.
In light of this, Bonanza Senior Research Analyst Nitin Jain counseled investors to take a conservative stance and concentrate on domestically oriented sectors like banking and fast-moving consumer goods (FMCG), which are less impacted by global swings.
“Investors should be wary of sectors like capital goods and metals that are linked to global supply networks.Defensive investments or ETFs tied to gold can help lower volatility.Given the economy’s ongoing underlying strength,a small pullback may offer long-term buying opportunities in premium Indian companies,Jain continued.
Disclaimer: The sole intention of this story is education. The opinions and suggestions shown above are not those of bharatbulletin24x7.com; rather, they are those of individual analysts or broking firms. Before making any financial decisions, we encourage investors to consult with qualified professionals.
