August 4, 2025

On July 31, 2025, US President Donald Trump announced a 25% tariff on specific Indian exports, resulting in notable selling pressure within the Indian stock market. In the subsequent trading sessions on Thursday and Friday, major indices faced declines; the Nifty 50 index fell from 24,855 to 24,565, while the BSE Sensex decreased from 81,481 to 80,599. The Bank Nifty index also dropped from 56,150 to 55,617. Small-cap and mid-cap indices experienced similar downward trends. Despite selling pressure, traders noted that the Nifty 50 remains above the significant support level of 24,500, indicating potential buying interest around 24,600 levels. The situation has spurred speculation on whether the Indian market can display resilience and reverse its current trend in light of Trump's tariffs. Stock market experts observed that although Dalal Street is seeing some selling due to the tariffs, the broader market sentiment remains intact, with key indices staying above crucial support levels. As Trump’s tariffs are anticipated to impact Indian exports by approximately $33 billion, analysts believe that while some sectors will feel the pinch, the overall market sentiment will not be severely affected. Vinod Nair, Head of Research at Geojit Investments, indicated that the US is India’s largest export market, contributing about 2.2% to India's GDP in 2024. He argued that while the tariffs would create pressure on India’s economy, the overall impact may be limited because other emerging markets (EMs) have recently received tariff reductions, posing a competitive advantage for India against rivals such as China. Industry expert Prashant Tandon from Waterfield Advisors noted a potential change in global trade dynamics, suggesting that India could emerge in a new era of re-globalisation characterized by strategic integration and regional partnerships. Tandon highlights potential opportunities that may arise from this shifting landscape, allowing domestic industrial leaders to benefit from supportive policies. In a similar line of thought, Gaurav Goel, the Founder and Director at Fynocrat Technologies, outlined five reasons why the Indian stock market did not overreact to the tariff announcement: First, the timing of Trump's tariff announcement aligns strategically before the August 1 deadline, giving the impression of a warning rather than a finalized decision. Second, there are ongoing trade discussions between the US and India, scheduled for August 25, implying that a resolution can be pursued. Third, strong support from domestic institutional investors (DIIs) has provided some cushioning against external shocks, with substantial buying activity noted on the day of the announcement. Fourth, the market had long anticipated the tariff announcement, reducing its sensitivity to this news. Lastly, the growth narrative in key sectors remains intact despite the tariffs. Seema Srivastava, a Senior Research Analyst at SMC Global Securities, suggests that while indicative impacts of Trump's tariffs could marginally reduce India's GDP growth, supported domestic demand could mitigate this effect. She notes that any substantial shifts in investment focus are likely to happen, with investors moving funds from sectors exposed to US exports to those more domestically oriented, such as banking or infrastructure. On the night of July 30, Trump criticized India’s trade practices, stating that despite India's friendly status, US engagement had been hampered by India's high tariffs and stringent trade barriers. "India has among the highest tariffs in the world and the most obstructive non-monetary trade barriers," Trump shared via his social media platform, Truth Social. Looking ahead, investors will need to monitor upcoming developments in the US-India trade dialogue. The evolving scenario indicates that while short-term fluctuations are likely in the Indian stock market, the overall economic landscape could reveal opportunities as businesses adapt to the changing global trade dynamics. It’s crucial for investors to consult with certified experts before making investment choices in this context as sentiments and market conditions continue to shift.

Read More at News →

Tags: Trump, India, Tariff, Stock market, Trade, Economy,