Smallcap, Midcap Stocks Cheer Trump’s Tariff Pause; PI Industries, Dixon Tech, Deepak Nitrite Top Gainers

Indian smallcap and midcap stocks staged a remarkable rally on April 11, 2025, buoyed by US President Donald Trump’s announcement of a 90-day pause in reciprocal tariffs for 75 countries, including India. Among the standout performers were PI Industries, Dixon Technologies, and Deepak Nitrite, which emerged as top gainers in the broader market.

Market Performance Overview

The broader market indices showcased significant gains on Friday:

• Nifty Smallcap index: Surged 2.68% (403 points) to reach 15,664
• BSE Smallcap index: Rallied 3.10% (1,377 points)
• Nifty Midcap index: Gained 1.76% (881 points)
• BSE Midcap index: Rose by 719 points to close at 40,265

The benchmark indices also demonstrated strong momentum:

• Sensex: Closed 1,310.11 points (1.77%) higher at 75,157.26
• Nifty 50: Ended with a gain of 429.40 points (1.92%) at 22,828.55

Top Performing Stocks

The highlighted companies in the headline were indeed among the day’s top performers:

• PI Industries: Surged 9.76% (as reported by Business Today) or nearly 10% to close at ₹3,619 (as reported by Moneycontrol)
• Dixon Technologies: Jumped 7.88% to close around ₹14,228
• Deepak Nitrite: Gained 7% (according to Business Today) or 5.56% to reach ₹1,907 (as reported by Business Today in a separate article)

Catalyst: Trump’s Tariff Pause

The primary driver behind this market rally was the announcement made by US President Donald Trump on April 9, 2025, declaring a 90-day pause in reciprocal tariffs for 75 trading partners, including India. This development came as a significant relief after Trump had previously announced harsh reciprocal tariffs on April 2, which had initially triggered substantial market downturns globally.

The temporary pause effectively reduced the tariffs on Indian goods from 26% to approximately 10% during this 90-day negotiation period. This reprieve improved market sentiment dramatically, as traders and investors responded positively to this development.

Why These Specific Stocks Responded Strongly

PI Industries

PI Industries demonstrated the strongest response among the highlighted companies, with several factors contributing to its impressive performance:

1. High Export Exposure: Exports constitute a significant portion of PI Industries’ revenue mix. At the end of the December quarter, the company had an order book of around $1.4 billion, of which a substantial 83% was exports.
2. North American Exposure: For the financial year 2024, the North American market contributed 44% to the company’s annual revenue, making it particularly sensitive to US tariff policies.
3. Analyst Sentiment: Out of 28 analysts covering the stock, 15 have a ‘buy’ rating, eight suggest ‘hold’, while only five recommend ‘sell’. Jefferies specifically noted that the 90-day pause removed an immediate overhang on the stock, though they had previously estimated that if 50% of the tariffs were absorbed, the impact on PI Industries’ EBITDA could be around 6%.

Dixon Technologies

Dixon Technologies also posted significant gains, supported by:

1. US Export Relevance: While the company’s US exports represent about 5% of its total revenue (approximately ₹1,600–1,700 crore in the last financial year), the tariff pause alleviates immediate pressure on this growing segment.
2. Strategic Expansion Plans: Dixon is expanding its production capacity for a key mobile phone customer who wants to increase manufacturing in India, partly due to the shifting global supply chain dynamics caused by tariff uncertainties.
3. PLI Scheme Investment: The company plans to invest nearly ₹1,000 crore over the next two to two-and-a-half years under the government’s Production Linked Incentive (PLI) scheme, focusing on display and camera module manufacturing.

Deepak Nitrite

Deepak Nitrite’s strong performance was driven by a combination of the tariff pause and company-specific developments:

1. Major Capex Announcement: The company announced that its subsidiary, Deepak Chem Tech Limited (DCTL), would invest ₹3,500 crore to set up a manufacturing complex for phenol, acetone, and isopropyl alcohol.
2. Specialty Chemicals Expansion: DCTL also approved an additional investment of around ₹220 crore to support its foray into specialty fluoro chemicals.
3. Chemical Sector Relief: As a key player in the chemical industry, which could face significant tariff impacts (chemicals excluding pharmaceuticals could be affected by a 6.05% tariff according to some analyses), the temporary pause provides a welcome reprieve.

Broader Market Implications

The rally in smallcap and midcap stocks reflects a broader market optimism, though experts caution that challenges remain:

1. Temporary Relief: The 90-day pause is seen as a negotiation window rather than a permanent solution, with uncertainty about what might follow.
2. Sector-Specific Impacts: Different sectors within the Indian economy would be affected differently by potential tariffs, with pharmaceuticals, chemicals, and electronics manufacturing being among the most sensitive.
3. Competitive Positioning: With higher duties still imposed on countries like China (34%), Vietnam, and Thailand, India is seen as being in a relatively advantageous position, potentially benefiting companies with global manufacturing footprints.

Looking Ahead

While the market has responded positively to the tariff pause, several factors will determine the longer-term trajectory:

1. Negotiation Outcomes: The results of the 90-day negotiation period will be critical for sustained market performance, particularly for export-oriented sectors.
2. Individual Company Strategies: Companies like Dixon Technologies and Deepak Nitrite are implementing expansion strategies that might help buffer against future tariff impacts.
3. Global Trade Dynamics: The evolving US-China trade relationship continues to influence global supply chains, potentially creating opportunities for Indian manufacturers.

The current market rally, while significant, occurs against a backdrop of year-to-date declines in broader indices, with smallcap and midcap indices still down approximately 12% and 17%, respectively, for the year. The tariff pause has provided a much-needed respite, but market participants remain cautious about longer-term implications.

Business Today reports that this positive momentum may continue if global cues remain supportive and domestic economic indicators maintain strength.