Last Updated:
US President Donald Trump’s 50% tariff on Indian exports will take effect from August 27; Will it impact the Indian stock market?
Stock market
US President Donald Trump’s 50% tariff on Indian exports will take effect from August 27, after the Department of Homeland Security confirmed that steeper duties will apply from 12:01 am Eastern Daylight Time.
Markets Slide Ahead of Tariff Impact
Indian equities fell sharply on Tuesday as the impending tariffs weighed on sentiment. Both benchmark indices dropped around 1% each in a broad-based sell-off. The NSE Nifty lost 255.7 points, or 1.02%, to close at 24,712.05, while the BSE Sensex declined 849.37 points, or 1.04%, to settle at 80,786.54.
Sectorally, all NSE indices ended lower except FMCG. Realty, PSU banks, and consumer durables were among the worst hit, falling between 1.8–2.2%.
Analysts Warn of Prolonged Adjustment
According to Rajesh Palviya, head of technical and derivatives research at Axis Securities, the market had hoped for a rationalisation or delay in the additional 25% duties. “But with the US signing the order, that hope has faded, triggering a sell-off,” he said.
Palviya noted that the mood remains weak, and since markets will remain closed on Wednesday for Ganesh Chaturthi, they will reopen on Thursday during the Nifty’s monthly expiry, a factor that could keep supply pressure intact.
No Quick Resolution in Sight
Analysts said there are few signs of a near-term resolution to the tariff issue. Vikram Kasat, head of advisory at PL Capital, said: “Markets are now bracing for a prolonged period of adjustment as tariffs are set, bilateral negotiations are cooling, and no quick resolution is in sight. While a trade deal could reverse some tariffs, we now expect ongoing volatility and a shift in global supply chains. This may well be the ‘new normal’ unless meaningful negotiation resumes.”
Kasat added that sectors such as textiles and apparel, gems and jewellery, auto parts and components, leather, furniture, chemicals, and seafood will be the worst hit, while pharmaceuticals, electronics, energy, and critical minerals are exempt and thus face limited immediate exposure.
FIIs Exit, Volatility Rises
The Nifty Volatility Index (VIX) jumped 3.7% to 12.19, indicating growing caution among traders. Foreign portfolio investors (FPIs) were net sellers of shares worth ₹6,517 crore, while domestic institutional investors (DIIs) bought equities worth ₹7,060 crore.
Global Cues Remain Weak
The decline in Indian equities reflected broader weakness across Asian markets. Japan fell 1%, China dropped 0.4%, Hong Kong slipped 1.2%, and South Korea lost 1%, while Taiwan edged up 0.1%. In Europe, the Stoxx 600 index was down 0.6% at the time of reporting.
Broader Market Sees Steeper Declines
The pain was more severe in the broader markets. The Nifty Midcap 150 fell 1.5%, while the Nifty Smallcap 250 declined 1.9%. On the BSE, out of 4,241 stocks traded, 1,155 advanced and 2,973 declined.
Market Outlook
Palviya of Axis Securities warned that persistent FII selling, a weaker rupee, and rising commodity prices are further dampening sentiment. He said if the Nifty opens below 24,700 on Thursday, it could slip towards 24,500, while resistance on the upside is seen at 24,900–25,000.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
Read More