Trump Tariff Fallout: Textile, IT, Pharma, Auto Ancillary Stocks Take a Hit

Indian export-linked stocks took a sharp knock on July 31 after former US President Donald Trump surprisingly slapped a punitive 25% tariff and penalties on imports from India.

Moving away from expectations of striking a trade deal, Trump’s tariffs on Indian imports rattled sentiment for export-oriented sectors like textiles, fishing, pharmaceuticals and auto ancillary, all of which have considerable exposure to the US export market.

Textile Stocks Take a Beating

No sector felt the sting quite like textiles, where major export-linked stocks nosedived. Shares of Welspun Living , Vardhman Textiles, Arvind Ltd, and Alok Industries, dropped up to 5%.

On the other hand,  Indo Count Industries and Gokaldas Exports, both of which rely heavily on the US, with exports to the market making up to 70% of revenue, plunged as much as 9%. Pearl Global and KPR Mills also fell sharply up to 9%.

The slump in these counters reflects India’s vulnerability in apparel exports, where it competes with the likes of Bangladesh, Vietnam, and China. The 25% levies places India places at a higher tariff zone as compared to its key competitors in the sector, rocking sentiment.

Tech Stocks Slip on Trade Worries

Though not directly impacted by merchandise tariffs, IT stocks also weakened amid broader trade-related nervousness and a risk-off mood. Tech majors such as Tata Consultancy Services, Infosys, Wipro, HCL Technologies and Tech Mahindra floated in the red. The BSE IT index slipped over 1%.

While services exports are typically more insulated from tariff regimes, investors may be factoring in the potential for indirect fallout or faltering demand in the face of trade tensions.

Sentiment Hurt For Pharma Exports

Pharmaceuticals, another major export segment for India, saw broad-based losses. Blue-chip names like Dr Reddy’s Laboratories, Cipla, and Sun Pharma traded lower, weighing on the broader pharma index. While the pharma sector is currently exempted from Trump’s latest tariffs, the US President has dropped multiple hints of separate tax levies on the pharma sector being underway.

With US being a crucial market for Indian drugmakers, fears that additional scrutiny or tariffs on certain pharma exports have pushed investors on the edge. Analysts, however, suggest the demand for essential pharmaceuticals remains price-inelastic, cushioning some of the potential long-term damage.

Auto Ancillaries Lose Footing

The auto sector felt the tremors too, though to a milder extent compared to textiles. Shares of Samvardhana Motherson and Bharat Forge were all trading with cuts of up to 3%. The impact on the sector was also less intense as compared to others because the market had already priced in trade levies on auto components, already put in place.