Indian Markets Fall as U.S. Imposes 25% Extra Tariff on Indian Exports

Market Update at 10:30 AM: Indian equities opened lower on Thursday following the announcement of an additional 25 per cent tariff by the United States on Indian exports, raising concerns over potential economic fallout and strained bilateral relations. The move has led to a cautious sentiment among investors amid growing trade uncertainty.

The Nifty 50 index fell by 0.26 per cent to 24,511 points, while the BSE Sensex declined 0.24 per cent to 80,344.99 as of 9:23 a.m. IST. The market reaction reflects investor concerns about the impact of worsening ties with the U.S., one of India’s major trading partners.

Among broader indices, both Small-Cap and Mid-Cap segments also declined by 0.3 per cent each, as measured by the Smallcap and Midcap indices, respectively. Fourteen of the sixteen major sectoral indices traded in the red, indicating broad-based selling pressure across the board.

Despite the tariff hike, the Reserve Bank of India (RBI) on Wednesday retained its GDP growth forecast for the financial year at 6.5 per cent, signalling that it does not expect a major disruption to the broader economic outlook at this stage. The central bank appears to be downplaying the short-term impact of the U.S. tariff move.

The sell-off comes at a time when Indian markets have been witnessing high retail participation in IPOs and investor interest in dividend-paying and potential multibagger stocks, especially in the small-cap and mid-cap segments. The recent move could prompt investors to shift focus toward fundamentally strong Large-Cap names or stocks with strong Quarterly Results and consistent dividend history.

Pre-Market Update at 7:45 AM: Benchmark indices Nifty and Sensex are likely to open in the red on Thursday, August 7, following the imposition of a steep 50 per cent total tariff on Indian imports by former U.S. President Donald Trump. The additional 25 per cent tariff was announced in response to India’s continued purchases of Russian crude oil. The revised tariff policy will be effective from August 27, 2025, following a 21-day grace period. The move is expected to negatively impact India’s export competitiveness and reduce room for diplomatic negotiations.

As of 7:25 AM, the GIFT Nifty was trading at 24,598, down by 32 points from its previous close, indicating a weak start for domestic markets. Meanwhile, Asian markets were trading mixed, while Wall Street closed higher on Wednesday, with the Nasdaq leading gains, up by 1.21 per cent. The Dow Jones gained 0.18 per cent and the S&P 500 rose 0.73 per cent.

On the domestic front, Indian equities ended lower on Wednesday, August 6, after the Reserve Bank of India’s Monetary Policy Committee (MPC) kept the repo rate unchanged and retained a ‘Neutral’ stance. The Sensex declined by 166.26 points to close at 80,543.99, while the Nifty slipped 75.35 points to end at 24,574.20. Sentiment was further impacted by renewed concerns over U.S. trade policy.

Institutional flows reflected a continued divergence in sentiment. Foreign Institutional Investors (FIIs) remained net sellers for the 12th straight session, offloading equities worth Rs 4,999.10 crore. In contrast, Domestic Institutional Investors (DIIs) were net buyers, purchasing shares worth Rs 6,794.28 crore, continuing their 22-day buying streak.

Investors will focus on Q1 FY26 earnings results from key companies today, including Life Insurance Corporation of India, Titan Company, Solar Industries India, Godrej Consumer Products, Cummins India, BSE Limited, Hindustan Petroleum Corporation, General Insurance Corporation of India, Kalyan Jewellers India, Linde India, Page Industries, Max Financial Services, and Biocon. Stock-specific movements are expected based on quarterly results, particularly in large-cap and mid-cap counters.

In commodities, gold remained stable in early Asian trading at USD 3,368.47/oz, up 0.1 per cent, as markets weigh Trump’s tariff decision and possible U.S.-Russia dialogue. Trump stated there was a "good chance" of meeting President Putin soon, potentially easing geopolitical concerns.

Crude oil prices recovered slightly after a five-day losing streak. Brent crude futures rose above USD 67 per barrel and WTI crude approached USD 65 per barrel. The rebound was driven by concerns over global supply disruptions stemming from geopolitical tensions.

For today, PNB Housing remain on the F&O ban list.

Disclaimer: The article is for informational purposes only and not investment advice.