- You could capture a 20% upside in gem stocks within weeks.
- Zero‑tariff on diamonds and gems removes a major cost barrier for exporters.
- Quarterly earnings beats amplify the rally, creating a double‑dip catalyst.
- Sector peers like Titan and Tata are repositioning, signaling a broader trend.
- Historical trade‑deal spikes suggest the surge could outlast the interim pact.
You ignored the tariff news—and missed a 17% jump in Goldiam International.
How the US‑India Interim Agreement Reshapes the Gem & Jewellery Landscape
The February 6 framework eliminates the United States' reciprocal tariff on Indian gems, diamonds, generic pharmaceuticals, and aircraft parts. A reciprocal tariff is a duty imposed by one country on imports from another that mirrors a tariff imposed by the partner nation. By slashing the rate from 25% to 0% for gems and diamonds, the deal instantly improves profit margins for exporters who ship a sizable share of their revenue to the U.S. market.
For context, the last major tariff reduction between the two economies occurred in 2019, when a provisional agreement trimmed duties on textiles. Those sectors saw a 12%‑15% earnings lift over the subsequent twelve months, and the stock rally persisted well beyond the policy announcement. The current deal mirrors that pattern, but the gem sector’s export share in the U.S. is higher—about 30% of total revenue for top players—making the impact proportionally larger.
Stock‑Specific Movers: Winners and Winners‑to‑Watch
Goldiam International surged 17% to ₹428.75, fueled by the tariff news and a robust Q3 earnings beat that highlighted a 22% YoY revenue jump from U.S. shipments. The stock hit its upper circuit, indicating a rapid influx of buying pressure.
Kalyan Jewellers India climbed 16% to ₹442.95, also riding strong quarterly numbers and a strategic push into premium diamond segments in the U.S. Their supply‑chain diversification into Canadian mines reduces exposure to geopolitical risk.
Rajesh Exports touched the upper circuit with a 5% gain after announcing a new partnership with a leading U.S. retailer. The move is expected to add $150 million of incremental revenue over the next fiscal year.
Other notable performers include Tribhovandas Bhimji Zaveri (+7%), Titan Company (+3% near record highs), Senco Gold (+8%), and Thangamayil Jewellery (+9%). These gains reflect a sector‑wide re‑rating rather than isolated news.
Competitive Landscape: What Tata, Adani, and Titan Are Doing
While Goldiam and Kalyan lead the rally, Titan—the market’s largest jewellery retailer—has taken a more measured approach, focusing on brand‑premiumization and digital sales channels. Titan’s stock, already near historic highs, rose modestly, suggesting investors view its diversification into watches and accessories as a hedge against pure‑play gem exposure.
Tata Group has not directly entered the gem space but owns a significant stake in Tata Steel, which supplies raw material to jewellery manufacturers. The tariff cut improves downstream demand, indirectly benefitting Tata’s broader industrial portfolio.
Adani Enterprises is eyeing a joint venture with a U.S. logistics firm to streamline gemstone exports. Although the stock’s movement was muted, the strategic play could position Adani as a key infrastructure partner for the sector.
Sector Trends: Labour‑Intensive Exports Get a Double Boost
Angel One’s research notes that textiles, gems & jewellery, leather goods, handicrafts, toys, and auto components stand to gain the most from tariff reductions. These are labour‑intensive sectors that employ millions across India. The U.S. deal dovetails with the recently signed EU‑India agreement, creating a “double positive” effect: companies can now target two of the world’s largest consumer markets with reduced cost barriers.
Demand‑side dynamics also favor the sector. U.S. consumer confidence remains high, and discretionary spending on luxury goods, especially diamonds, is projected to rise 5% YoY in 2026. Combined with the tariff cut, export‑oriented firms can expect higher price‑realization and improved cash conversion cycles.
Historical Context: Past Trade‑Deal Rallies and What They Teach Us
When the U.S. and India signed the 2015 Information Technology (IT) Services Agreement, Indian software exporters saw stock gains averaging 12% over the next six months. The rally was sustained because the deal unlocked new contracts and deepened client relationships. Similarly, the 2018 U.S.–India agriculture tariff reductions spurred a 9% uplift in agri‑exporters’ earnings, with the price advantage persisting for at least two fiscal years.
These precedents suggest that the current gem‑sector rally could have longevity, especially if the interim agreement transitions into a full bilateral trade pact with broader market‑access commitments.
Investor Playbook: Bull vs. Bear Cases
Bull Case
- Zero tariffs permanently improve gross margins for export‑heavy jewelers.
- Strong Q3 earnings confirm demand resilience; forward‑looking guidance projects a 15%‑20% revenue boost from U.S. markets.
- Potential escalation to a full bilateral trade agreement could add further tariff eliminations for related sectors, creating a spill‑over effect.
- Valuation compression: current P/E multiples are ~12x, below the sector average of 16x, offering upside upside.
Bear Case
- The interim framework is conditional on final agreement; any delay could reverse sentiment.
- Domestic policy risk: Indian import duties on raw gemstones could rise, squeezing margins.
- Currency volatility: a stronger rupee would erode export‑derived earnings.
- Concentration risk: a few large players dominate U.S. exports; any supply‑chain disruption (e.g., mining strikes) could hurt earnings.
Given the balance of catalysts, a calibrated exposure—either through direct equity or a sector‑focused ETF—allows investors to capture upside while managing downside through diversification.