How the U.S. 25% tariff plus penalty on India impacts India’s textile, IT, auto, and pharma stocks

Textile, IT, auto and pharma stocks were trading lower on Thursday (July 31, 2025) after U.S. President Donald Trump announced the imposition of a 25% tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment.

Among textile-related stocks, Welspun Living tanked 5.27%, Vardhman Textiles declined 3.27%, Arvind Ltd fell by 3.16% and Alok Industries dropped 2.82% on the BSE.

From the IT pack, shares of Hexaware Technologies quoted 1.92% down, Wipro traded 1.44% lower, Infosys dropped 1.34%, Tata Consultancy Services dipped 1.19%, HCL Technologies (1.06%) and Tech Mahindra (0.88%).

Tracking weak trend in these stocks, the BSE IT index declined 1.29% to 34,577.71.

Among pharma stocks, Jubilant Pharmova dropped 3.15%, Ipca Lab slipped 3.28%, Lupin (2.63%), RPG Life Sciences (2.56%), Dr Reddys Lab (1.55%), Cipla (1.43%) and Sun Pharma (0.81%).

Shares of Maruti Suzuki India, Bajaj Auto, Ashok Leyland, Tata Motors, Mahindra & Mahindra and TVS Motor Company were also quoting lower.

The BSE auto index dipped 0.72% to 52,708.33.

In the equity market, the 30-share BSE Sensex traded 574.64 points down at 80,906.60, and the 50-share NSE Nifty tumbled 173.50 points to 24,678.85.

The announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the U.S., which has, in recent days, got favourable trade deals with major partners like Japan, the U.K. and the European Union.

The penalty was announced as India has made large purchases of oil and military equipment from Russia. India is the first country to face a penalty for Russian imports.

Utsav Verma, Head of Research, Institutional Equities at Choice Broking, said investors will reassess their strategies with a mix of caution and optimism.

Sectors like textiles, pharmaceuticals, and automotive components are likely to be the most impacted and may see reduced investor interest in the short-term.

However, recent progress in trade negotiations suggests a constructive path forward, and “we believe that the trade deal will eventually follow, provided both nations show the necessary political will”, he said, adding that many investors expect the tariff rate to eventually settle around 15%.

“While a 25% tariff imposed by the US on Indian exports certainly disrupts vital sectors and presents immediate challenges for India’s economy, it is improbable that it will significantly alter the country’s long-term growth path.

“India’s growth narrative is supported by solid fundamentals such as a growing domestic market, vibrant entrepreneurial spirit, and increasing international partnerships,” Rajesh Palviya, SVP – Research, Axis Securities, said.