Gift Nifty, the indicative benchmark to gauge Nifty's opening level, fell sharply on July 30 to as much as 0.70 percent at 6:15pm - sliding below 24,700 - soon after US President Trump announced a 25 percent tariff on India along with a penalty for energy and defence purchases from Russia, starting August 1.
Benchmark indices Sensex and Nifty are expected to see a decline tomorrow (July 31), in reaction to President Trump's tariffs and penalty, with export-oriented sectors likely to take the most hit.
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The stock market ended the session on a flat note on July 30, with benchmark indices closing with marginal gains. At close, Sensex was up 144 points (0.18 percent) at 81,482, while Nifty 50 was up 34 points (0.14 percent) at 24,855. However, several market participants have been citing the delayed trade deal as an overhang for Indian equities, with Nifty 50 down by 206 percent in the last one month.
The rupee was weak in the session, closing at over-four month lows fearing an impact on exporters, after the US President said he was considering 20-25 percent tariff on India.
In a post on Truth Social, Trump described India as America's "friend" but added that it will face 25 percent tariffs plus a penalty for buying Russian military equipment and oil. The US President reiterated that India has among the "highest tariffs in the world".
"Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump said on his social media platform.
Trump said that India will face a penalty along with the tariffs from August 1, as it imports a vast majority of its military equipment and energy needs from Russia. He didn't specify how much extra penalty will be imposed over and above the tariffs.
Trump’s tariffs revive concerns over protectionism just as markets were stabilizing post-slowdown, said Bhavik Joshi, Business Head at INVasset PMS. “A tariff of this magnitude poses risks, but its macroeconomic dent is likely to be contained,” he said.
The analyst noted that early estimates hint at a GDP loss of $3-8 billion, which is lower that the $10-15 billion potential gains which may arise from the trade realignment and supply chain diversification.
“Markets may reprice risk temporarily, but structurally, India is better positioned than most to absorb and pivot. The focus now shifts to execution—on supply chain reconfiguration, INR trade acceleration, and bilateral trade deals. Amid noise, India’s fundamentals remain the clearest signal,” he said.
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