From Auto To Pharma: India's Key Sectors Most Exposed To Trump's 25% Tariffs
Analysts expect textiles, automobiles, oil & gas, and pharmaceuticals to be the most vulnerable to these measures
All major sectoral indices, barring FMCG and media, ended lower on Thursday as investor sentiment weakened after US President Donald Trump announced a 25% tariff on Indian goods starting August 1, along with additional non-tariff penalties on crude oil purchases from Russia. Analysts expect textiles, automobiles, oil & gas, and pharmaceuticals to be the most vulnerable to these measures.
The textile sector is likely to be among the hardest hit, given the US is its biggest market. 'Margins are expected to take a hit till global trade stabilises," said Prerna Jhunjhunwala, VP equity research (textile and retail), Elara Capital. Shares of Vardhman Textiles and Kitex Garments slumped 5% each, while Gokaldas Exports shed 4.5%. Indo Count Industries and Welspun Living also lost 4% apiece. Sunny Agrawal, head of fundamental equity research, SBICAPS Securities, noted that 'textiles and gems & jewellery stocks are expected to see the most adverse impact due to their high dependence on the US."
Automobiles
The impact of tariffs on the auto sector remains less clear, as automobiles were already subject to 25% levies under the earlier round of tariff hikes. Analysts believe domestic-focused auto companies may remain largely insulated, but firms with significant US exposure could face headwinds. The Nifty Auto index slipped as much as 1.5% intraday before closing 0.4% lower. Balkrishna Industries fell 2.8%, Bharat Forge 2.3%, while Exide Industries, Samvardhana Motherson International and MRF closed over 1% lower. However, Emkay Global said the sector is 'better placed than feared" since India exports very few vehicles to the US, and auto component makers could benefit if tariffs hit rivals in China, Canada and Mexico.
Oil & Gas
The Nifty Oil & Gas index declined 1.5%, with 14 of the 15 constituent stocks ending in the red. Mahanagar Gas dropped 4.1%, Adani Total Gas 3.4% and Gujarat State Petronet 2.8%. Shares of IOC, Hindustan Petroleum, GAIL, Oil India and BPCL fell between 1.5% and 2.5%. 'Investors are factoring in supply constraints due to US sanctions on Russian crude purchases by China and India, along with additional penalties on India's Russian oil imports," said Swarnendu Bhushan, co-head of institutional research at Prabhudas Lilladher. He added that higher crude prices could weigh on gross marketing margins of oil marketing companies.
Pharmaceuticals
Pharma stocks also weakened, with the Nifty Pharma index falling 1.3% and the Nifty Healthcare index down 1.1%. The US is the biggest market for Indian drugmakers, raising concerns about potential fallout. 'In the absence of overnight alternatives for generic drug makers, the US is unlikely to impose tariffs on pharma, as healthcare costs there would surge significantly," said Agrawal. Still, he noted that despite Washington's push for domestic manufacturing, questions remain over the viability of producing at scale in the US.
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