India's auto ancillary stocks experienced a significant rally, with gains of up to 20% on Tuesday, February 3, 2026, fueled by renewed optimism following the announcement of a trade deal between India and the United States. The agreement, which slashes tariffs on Indian goods exported to the US, has boosted hopes for increased exports and improved competitiveness for Indian manufacturers.
The India-US trade deal marks a significant development, with the US reducing tariffs on Indian goods to 18% from a previous rate of 25%. Some reports indicate the previous rate was as high as 50%. This reduction is expected to provide immediate tariff relief for Indian exporters, enhancing their margins and order visibility. The agreement came after multiple rounds of trade negotiations between the two countries, with informal discussions occurring as recently as December.
GNA Axles emerged as a top gainer among auto ancillary stocks, surging 20% to ₹425. Other notable gainers included Delta Autocorp, Sterling Tools, and Tube Investments of India. At 10:06 AM, the Nifty Auto index was trading 2.93% higher, with stocks like Bharat Forge and Sona BLW Precision Forgings also showing significant gains.
The reduction in tariffs is anticipated to directly improve price competitiveness, margins, and order visibility for Indian exporters, strengthening long-term supplier relationships with US Original Equipment Manufacturers (OEMs). According to a JM Financial report, the US accounts for 22% of Bharat Forge's total sales, highlighting the significant exposure of some auto ancillary companies to the US market. Sectors heavily exposed to the US, where the US accounts for 25-30% of their export revenues, are witnessing considerable traction.
Axis Securities believes that auto ancillary companies are better positioned to capture a larger share of the benefits compared to vehicle OEMs, given their higher export intensity, contractual supply arrangements, and limited dependence on end-market pricing actions. They identified Steel Strips Wheels, Sansera Engineering, Tata Motors, Bharat Forge, and Sona BLW as key beneficiaries of the US-India trade deal.
The positive sentiment extends beyond auto ancillaries, with textile stocks also experiencing a surge. Gokaldas Exports Ltd, for example, hit its 20% upper circuit. Sectors such as textiles, seafood, chemicals, and select consumer companies are also expected to be key beneficiaries of the trade deal.
The trade deal's announcement has seemingly overshadowed concerns arising from the Union Budget 2027, which had previously led to a dip in the Nifty 50. The agreement is viewed as a catalyst for a market turnaround, removing a major overhang on Indian equities.