Shares of Indian companies heavily reliant on the US market faced intense selling pressure on Dalal Street on Thursday after US President Donald Trump imposed a 25% tariff and additional penalties on goods imported from India.
Among the hardest hit were textile stocks, with Welspun Living plunging over 4%. The company, a major exporter of home textiles to US retailers like Walmart and Costco, derives 60-65% of its revenue from the US market.
Similarly, shares of Vardhman Textiles crashed 5%, Arvind Ltd fell by 4.5%, Alok Industries dropped 2%, Gokaldas Exports, 80% of whose revenue is generated from the North American market, declined 4.5%, and Kitex garments, 70% of whose revenue comes from the US, fell 5%. Many other textile stocks also witnessed similar selloffs.
Pharma stocks were also under pressure on Thursday given 40% of India's total pharma exports go to the US. The world’s largest economy is India's largest overseas pharma market, with exports rising 21% from $8.1 billion in FY24 to $9.8 billion in FY25.
While India currently pays zero tariff on export of generic drugs to the US, there are fears that the 25% tariff will be applicable to the pharma sector as well. Shares of two leading pharma firms -- Dr Reddy's and Sun Pharmaceutical -- fell 1.6% and 1.7%, respectively, on Thursday as the US market generates a significant chunk of their revenue.
Share of Natco Pharma, 68% of whose revenue comes from the US market, fell more than 2%. Aurobindo Pharma, Zydus Lifesciences and Biocon were also under selling pressure on Thursday as the US market accounts for between 40-50% of their revenue.
Shares of auto component companies also witnessed selling pressure on Thursday. Stocks such as Sona BLW, Samvardhana Motherson, Uno Minda, Bharat Forge and Ramkrishna Forgings declined up to 3% amid concerns over the impact of higher trade duties on export-driven revenue. India exported $2.2 billion worth of auto parts to the US in FY24, accounting for 29.1% of its total auto parts exports.
SBI Securities in a report said that several auto and related companies are expected to feel the pinch of the recently imposed 25% US tariff on Indian exports. It added that Mahindra & Mahindra (M&M), which exports a major portion of its tractor volumes to the US, and Bharat Forge, which derives nearly 40% of its total revenue from America, could face an impact of higher duty. Among others, Balkrishna Industries exports around 15% of its tyre volumes to the U.S., while Ramkrishna Forgings has a significant order book from North America. Shares of Balkrishna Industries fell 3% on Thursday.
Shares of Indian refineries and oil market companies also plummeted on Thursday. State-owned firms such as Hindustan Petroleum, Indian Oil and Bharat Petroleum fell between 2 and 3% while Reliance Industries Ltd fell 1.4% on the street. Trump specifically criticised India and said the penalty would be imposed from 1 August for buying Russian oil and weapons "at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE".
Russian oil makes up approximately 37% of India's total oil imports.
The tariff has also raised serious concerns in India’s gems and jewellery industry. India exported gems and jewellery worth $9.9 billion to the US in 2024, making up 12.8% of total Indian exports to the US. Shares of Titan, Kalyan Jewellers, Rajesh Exports, TBZ, Goldiam International, and Thangamayil Jeweller fell between 1 and 5% on Thursday.
Companies operating in the steel & aluminium, solar equipment, IT industry and electronics goods sectors have also come under pressure owing to high exposure in the US market.
Vikas Gupta, CEO & Chief Investment Strategist at OmniScience, said that since tariffs could impact near-term revenues and earnings, investors may prefer to stay away from companies with large exports to the US, especially if the current market prices of the companies have been driven by prospects of large growth.
“For the current post-tariff situation we would ideally focus on companies with low or no exposure to the US markets. In our opinion, a deal will be reached eventually and the tariffs should be lower at that point in time,” added Gupta.