Indian equities opened with a measured fall in reaction to US President Trump's additional 25 percent tariffs and the threat of secondary sanctions, with the Nifty 50 down less than 0.2 percent in early trade on August 7, as investors digested the sectoral impact across the spectrum.
Textile shares were under some selling pressure, with Gokaldas Exports, Pearl Global Indo Count, Welspun Living among some names bearing the brunt, while pharma companies were exempt from the latest round of tariff action. The Nifty Pharma index was higher by half a percent in early session, bucking the broader trend. Read More
Aditya Birla Sun Life AMC's CIO Mahesh Patil said a lot will depend on how the Indian government responds to Trump’s pressure tactic. "The first priority is supporting exporters. On Russia links, the government has so far taken a defiant stance on its oil imports from Russia. The government could look to negotiate with the US, utilising the 21-day reprieve and the upcoming trip of the US trade negotiators," he added.
Read More: Trump’s tariff hike sparks competitiveness, layoff fears among India’s MSME exporters
"We had earlier expected a downside risk of approximately 20 bps to FY26 GDP. If these tariffs materialise, then the hit could be higher, depending on their duration," Mahesh Patil added.
Earlier in the day, PM Modi, speaking at an agri-related conference in New Delhi made a firm statement backing India's farmers and said the government will 'never compromise' on the interests of India's farmers, fishermen, those involved in the animal husbandry business. "For the Govt, India's farmers' welfare is the topmost priority," Modi said.
India has already issued a statement calling the tariffs 'unjustified and unreasonable', promising 'all actions necessary' to protect the national interest. Bloomberg News reported that the estimated impact of a 50 percent tariff on India could result in US-bound exports dropping by 60 percent, which in turn could potentially put 0.9 percent of India's GDP at risk. The latest round of levies put India's tariffs at par with Brazil. America is India's single-largest destination for exports, pegged at $87 billion, as per IMF data from 2024. The export of pharma and electronics exports, which accounts for as much as 30 percent of India’s US exports are exempt from tariffs as of now.
Trump's 25 percent 'reciprocal' tariff on India's exports to US will take effect from Thursday, after the additional 25 percent levy over Russian trade is set to come into effect from August 27.
Speaking to CNBC-TV18, Enam Holdings' Director, Sridhar Sivaram said the tariffs have impacted the India-US relationship, and will affect some sectors, though pharma sector may stay out of the scope of the tariffs. He added that this is not a good time from a market standpoint.
Sunil Singhania of Abakkus Asset Manager said expect for the tariff issue, most of the headwinds for India have turned into a tailwinds, and advised investors to not change their investment portfolio too much over next 15-20 days and wait for clarity to emerge. "Rather than changing portfolio too much, it is better to patient," Singhania added.
On the relatively measured reaction by market, Singhania said the markets have been mature after the initial turmoil early this year. "Post the strong reaction by markets in January and February, every subsequent comment has not been held on to. It has been a complicated, chaotic announcement, may be that is the reason why no one is taking them as seriously as the initial statements," Singhania added.
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