Trump-Starmer trade deal brings joy to Tata Motors shareholders, India-UK FTA also helps

Tata Motors shares continued their upward movement for the third straight day on Friday (May 9), rising by up to 3.5 per cent to reach an intraday high of Rs 704 on the BSE. This surge is driven by several positive factors, including the India-UK Free Trade Agreement (FTA), strong sales of Jaguar Land Rover (JLR), and the company’s strategic demerger plan.

The US-UK trade deal, announced Thursday (May 8), has also helped Tata Motors stocks jump upwards in green territory. The deal was announced by US President Donald Trump and British Prime Minister Keir Starmer in the first such accomplishment after Washington unleashed a global tariff campaign in early April.

Why is the stock rising?

Market experts point out several main reasons for the stock’s rise. These include optimism about the India-UK FTA and its potential benefits for JLR, expectations around the UK-US trade agreement, promising Q4 sales figures from JLR, and the demerger plan aimed at increasing shareholder value.

The newly announced India-UK FTA is expected to greatly reduce import duties on premium vehicles, from around 100 per cent to 10 per cent under a quota system.

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This could be a major advantage for JLR, making it more competitive in India and increasing sales. In the March quarter of FY25, JLR reported a 6.7 per cent increase in sales compared to the previous quarter and a 1.1 per cent growth compared to the same period last year, despite ongoing challenges in the Chinese market.

Additionally, Tata Motors recently announced a plan to restructure its business by separating its Commercial Vehicles (CV) division from its Passenger Vehicles (PV), Electric Vehicles (EV), and JLR operations into two independently listed companies.

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This move aims to improve operational efficiency and agility, with the long-term goal of creating more value for shareholders. The proposal has received strong support from analysts and investors alike.