India-US trade deal: Motilal Oswal picks Waaree, Bharat Forge, LT Foods as key winners
India -US trade deal: Motilal Oswal projects reversal in FII outflows, rupee recovery, and 12% Nifty earnings growth, with sectoral and macro benefits.
- Feb 3, 2026,
- Updated Feb 3, 2026 2:48 PM IST
The swift announcement of the long-awaited Indo-US trade deal marks a significant moment for Indian equity markets. The US has agreed to lower reciprocal tariffs on Indian imports from 25% to 18% and has removed the punitive 25% duty on Indo-Russian oil trade. This 32 percentage point reduction places Indian exports in a more competitive position and is anticipated to trigger a chain reaction of market and economic benefits.
Motilal Oswal highlights the deal as a high-impact event, suggesting it will stimulate Indian market performance both in the immediate term and over a longer horizon. The sectors expected to benefit most include auto ancillaries, defence, consumer products, textiles, electronic manufacturing services, consumer durables, IT services, as well as financial and utility companies.
The announcement addresses longstanding uncertainty and negative sentiment. The deal’s resolution lifts a major overhang on investor confidence, which had persisted due to months of stalled negotiations and apprehensions regarding India’s trade leverage with the US.
On the macroeconomic side, Motilal Oswal notes: "multiple positives will accrue in the form of 1) reversal of FII outflows, 2) INR recovering its lost ground, 3) general improvement in sentiments towards Indian equities, 4) return of confidence for FDI, and 5) retracement of India’s underperformance vs. EM peers, etc." This reflects the anticipated reversal of adverse trends that have affected Indian equities.
The timing of the deal surprised market participants. Motilal Oswal stated: "In most of our recent investor interactions, we sensed that the majority expected the deal discussions to be protracted, with completion around 2HCY26, ahead of the US midterm elections." The earlier-than-expected announcement is expected to improve sentiment and trigger reallocation into Indian equities.
Motilal Oswal describes the event as a "structurally 'positive allocation effect'", indicating a fundamental improvement for India’s long-term market performance. Strained Indo-US relations since April 2024 had contributed to about 40% underperformance against emerging market peers, as well as USD 22 billion of FII withdrawals and a 6% rupee depreciation since January 2025.
Motilal Oswal adds: "we believe many of these adverse trends are now likely to reverse." The brokerage expects renewed FII flows and rupee stability, improving India’s relative standing among emerging markets.
The drop in tariffs means Indian goods move from being among the most heavily taxed imports in the US to some of the least taxed. Only Switzerland, the EU, the UK, Japan, and South Korea offer lower tariffs, but their exports have less overlap with India due to differences in value chain positioning. Major emerging-market competitors such as China, Vietnam, Brazil, Thailand, and South Africa will continue to face higher tariffs, ranging from 19% to 40%.
This trade agreement follows the Indo-EU free trade deal signed the previous week, as well as recent deals with the UK, EFTA, Oman, and New Zealand. Motilal Oswal points to these developments as evidence of India’s increasing importance in global trade and strategic relations.
Motilal Oswal maintains a constructive view on Indian corporate earnings: "With this deal announcement, we believe that the market will now begin to accord correct weightage to the improving trajectory of corporate earnings growth, which has shown successive improvement over the quarters with an improving earnings revision trend." The brokerage also reports: "We had expected a 16% YoY growth in MOFSL PAT at the start of 3QFY26, and the results to date have been in line with our estimates." For Nifty, Motilal Oswal projects: "We expect ~12% earnings growth for Nifty over FY25-27E." Valuations remain below the 10-year average, with 20.4x seen as reasonable in the current context.
Motilal Oswal has picked Bharat Forge, Balkrishna Tyres, Raymond Lifestyle, Indo Count, Kitex, Welspun Living, Gokaldas Exports, LT Foods, Bluestar, Polycab, KEI Industries, Avalon Tech, Dixon Tech, SBI, ICICI Bank, HDFC Bank, Bandhan Bank, Federal Bank, Waaree Energies, Home First Finance, Aptus Housing and IT companies as key beneficiaries of the trade deal.
The swift announcement of the long-awaited Indo-US trade deal marks a significant moment for Indian equity markets. The US has agreed to lower reciprocal tariffs on Indian imports from 25% to 18% and has removed the punitive 25% duty on Indo-Russian oil trade. This 32 percentage point reduction places Indian exports in a more competitive position and is anticipated to trigger a chain reaction of market and economic benefits.
Motilal Oswal highlights the deal as a high-impact event, suggesting it will stimulate Indian market performance both in the immediate term and over a longer horizon. The sectors expected to benefit most include auto ancillaries, defence, consumer products, textiles, electronic manufacturing services, consumer durables, IT services, as well as financial and utility companies.
The announcement addresses longstanding uncertainty and negative sentiment. The deal’s resolution lifts a major overhang on investor confidence, which had persisted due to months of stalled negotiations and apprehensions regarding India’s trade leverage with the US.
On the macroeconomic side, Motilal Oswal notes: "multiple positives will accrue in the form of 1) reversal of FII outflows, 2) INR recovering its lost ground, 3) general improvement in sentiments towards Indian equities, 4) return of confidence for FDI, and 5) retracement of India’s underperformance vs. EM peers, etc." This reflects the anticipated reversal of adverse trends that have affected Indian equities.
The timing of the deal surprised market participants. Motilal Oswal stated: "In most of our recent investor interactions, we sensed that the majority expected the deal discussions to be protracted, with completion around 2HCY26, ahead of the US midterm elections." The earlier-than-expected announcement is expected to improve sentiment and trigger reallocation into Indian equities.
Motilal Oswal describes the event as a "structurally 'positive allocation effect'", indicating a fundamental improvement for India’s long-term market performance. Strained Indo-US relations since April 2024 had contributed to about 40% underperformance against emerging market peers, as well as USD 22 billion of FII withdrawals and a 6% rupee depreciation since January 2025.
Motilal Oswal adds: "we believe many of these adverse trends are now likely to reverse." The brokerage expects renewed FII flows and rupee stability, improving India’s relative standing among emerging markets.
The drop in tariffs means Indian goods move from being among the most heavily taxed imports in the US to some of the least taxed. Only Switzerland, the EU, the UK, Japan, and South Korea offer lower tariffs, but their exports have less overlap with India due to differences in value chain positioning. Major emerging-market competitors such as China, Vietnam, Brazil, Thailand, and South Africa will continue to face higher tariffs, ranging from 19% to 40%.
This trade agreement follows the Indo-EU free trade deal signed the previous week, as well as recent deals with the UK, EFTA, Oman, and New Zealand. Motilal Oswal points to these developments as evidence of India’s increasing importance in global trade and strategic relations.
Motilal Oswal maintains a constructive view on Indian corporate earnings: "With this deal announcement, we believe that the market will now begin to accord correct weightage to the improving trajectory of corporate earnings growth, which has shown successive improvement over the quarters with an improving earnings revision trend." The brokerage also reports: "We had expected a 16% YoY growth in MOFSL PAT at the start of 3QFY26, and the results to date have been in line with our estimates." For Nifty, Motilal Oswal projects: "We expect ~12% earnings growth for Nifty over FY25-27E." Valuations remain below the 10-year average, with 20.4x seen as reasonable in the current context.
Motilal Oswal has picked Bharat Forge, Balkrishna Tyres, Raymond Lifestyle, Indo Count, Kitex, Welspun Living, Gokaldas Exports, LT Foods, Bluestar, Polycab, KEI Industries, Avalon Tech, Dixon Tech, SBI, ICICI Bank, HDFC Bank, Bandhan Bank, Federal Bank, Waaree Energies, Home First Finance, Aptus Housing and IT companies as key beneficiaries of the trade deal.