India-US trade deal: GNA Axles, Delta Autocorp, Sterling Tools, Tube Investments of India, and Sibar Auto Parts were among the auto ancillary stocks trading with strong gains in Tuesday’s trade, February 3, after the US announced a much-awaited trade deal.
US President Donald Trump on Monday announced a reduction in reciprocal tariffs on Indian goods to 18% from 25% after holding a conversation with Prime Minister Narendra Modi. The US president is also reportedly removing an additional punitive 25% duty that was applied in response to India’s purchases of crude oil from Russia, removing a major overhang on the Indian stock market that had weighed on investor sentiment for several months.
The 18% tariff puts India at a competitive advantage, as Asia’s other largest economies, including China, are facing higher tariffs of 37% imposed by the US.
The trade deal came after the US and India held multiple rounds of trade negotiations since March, with the most recent informal discussions taking place in New Delhi during the visit of a trade team headed by the Deputy US Trade Representative (USTR) in December.
The announcement by Trump also came at a time when India and the European Union concluded the long-awaited free trade agreement (FTA) in January.
The trade deal has lifted optimism across the Street, prompting investors to look past the unexpected announcements in the Union Budget 2027, which had sent the Nifty 50 to a four-month low.
Sectors that are heavily exposed to the US are witnessing a good amount of traction in today’s session, with auto ancillaries being one of them, as the US accounts for 25–30% of their export revenues.
Among individual stocks, GNA Axles topped the list, surging 20% to ₹425, followed by Delta Autocorp, Sterling Tools, Balkrishna Industries, Bhagwati Autocast, Tube Investments of India, Sibar Auto Parts, NDR Auto Components, Sona BLW Precision, Steel Strips Wheels, Belrise Industries, and Rolex Rings, which are up between 4.5% and 11.5%.
Experts see stronger export viability, margin protection
Divam Sharma, co-founder and fund manager at Green Portfolio PMS, said the India–US trade deal has come out serendipitously, considering Trump’s actions since taking charge, especially when markets were expecting otherwise.
The Nifty Auto index opened 3% higher.
“The tariff cut is a positive development for India’s auto sector, especially component makers, as the US accounts for roughly a quarter to a third of their export earnings. Lower duties reduce trade barriers and improve cost competitiveness, strengthening India’s position in global OEM supply chains, while the impact on vehicle exporters remains modest due to their limited direct exposure,” he further added.
Anil Rego, founder and fund manager at Right Horizons PMS, said, “In automobiles and auto ancillaries, the benefit is more visible for component manufacturers integrated into global supply chains. Lower trade barriers improve export viability to US OEMs, support long-term sourcing relationships, and help protect margins that were earlier compressed by tariff costs. Over time, this can strengthen India’s positioning as a cost-efficient, reliable manufacturing base for global automotive supply chains.”
Earnings visibility improves for US-linked auto exporters, says Axis Direct
Domestic brokerage firm Axis Direct said auto ancillary companies are better positioned to capture a larger share of the benefits from the tariff reduction than vehicle manufacturers, given their higher export intensity, contractual supply arrangements, and minimal reliance on end-market pricing actions. In contrast, gains for OEMs are constrained by regulatory entry barriers and distribution economics.
Overall, while tariffs remain above long-term averages, the brokerage said the downward revision materially eases profitability and earnings pressures, improves FY27–FY28 earnings visibility, and supports valuation comfort for US-linked automobile exporters, with the impact skewed decisively towards the auto ancillary segment.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
