As a US citizen, you do need to report all of your worldwide income, including any income subject to a Tax Treaty (or DTAA). The DTAA doesn't alleviate the requirement to report the income, but rather tells us how to treat the income on the tax return. Different types of income are often treated in different ways.
You can see the treatment of gains in Article 13 of the US-India Tax Treaty. (As you will see, it doesn't say a whole lot.)
You will report the sale in the same manner as you will a US capital gain but you will convert to USD. You can use any reasonable method to make your conversion. Since the transaction occurred on a specific day, you may wish to translate using that day's average exchange - but you're not required to do so.
Another acceptable method is to use the average annual exchange, as found here: Yearly average currency exchange rates.
The most beneficial treatment for you on your US tax return will likely be to take a foreign tax credit for the tax (converted to USD) paid on your gain. TurboTax (when fully available) will walk you through this - but that section can sometimes be a little tricky so please do come back and let us know how we can help once you're ready to file. You are allowed to take a credit for the accrued ("deemed") taxes, even though you will pay them at a later date.
For California, you will unfortunately have to report the gain as taxable income since you are a full-time resident of the state. There is not an equivalent tax credit on the California return for foreign taxes paid. However, you can include the California tax paid on foreign income as foreign taxes paid when calculating your federal tax credit. See this discussion on that topic. You will have to prepare your federal return, then your California return to determine that tax paid. Then you will return to the federal portion to include that additional tax.
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