So problem was my texture settings were stuck to ultra where i wanted to play it on high. Because ultra settings were causing major stuttering in cut-scenes and gameplay both. But option to change texture to high was grayed out.
So here are few things you can do, if in a similar situation:
Changing Texture Resolution Quality in GameProfile.xml
For Windows 7) Go to "C:\Users\UserName\Documents\My Games\Watch_Dogs\*\GameProfile.xml" (Or figure out where GameProfile.xml is stored in your PC) and open this GameProfile.xml in text editor like Notepad."
In '<quality..../>' change "TextureResolutionQuality=" to high instead of ultra.
Save GameProfile.xml and start Watch Dogs and enjoy.
Less Watch Dogs Game stuttering along with higher graphics settings
This is may be issue with Windows Systems with less amount of RAM, say 4GB. To solve it do following:
Create a new shortcut to game, (Right click to GameLauncher.exe and select create shortcut)
Edit newly created shortcut, go to Target field and add "-disablepagefilecheck" (without the quotation marks) at the end of your game exe path.
Launch game and enjoy Watch Dogs with less or minimum amount of Shuttering.
Let us know in comments if these tweaks worked for you.