The Indian stock market saw a significant decline on Thursday morning, with Sensex and Nifty falling sharply, primarily due to concerns over new US tariffs on Indian goods.
Markets Reel from US Tariff Announcement
India’s benchmark stock indices, Sensex and Nifty, opened nearly one percent lower as investors reacted to the latest trade developments from the United States. US President Donald Trump announced a 25 percent tariff on all goods imported from India, effective August 1.
The BSE’s 30-share Sensex tumbled 0.96 percent, or 786.36 points, opening at 80,695.5. Similarly, the broader Nifty 50 dropped 0.86 percent, or 212.8 points, to begin trading at 24,642.25.
Experts Warn of Economic Impact
The new tariffs are expected to negatively impact India’s export sector and short-term economic growth. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., stated that the 25 percent tariff, coupled with potential penalties for energy and defense purchases from Russia, is “very bad news” for Indian exports.
Vijayakumar believes this short-term hit to exports will inevitably reflect in the stock market. While trade negotiations are ongoing, there’s hope the tariff rate might decrease eventually.
A report by Nomura echoed these concerns, suggesting that while the 25 percent rate might be temporary, a final tariff in the 15-20 percent range is still disappointing. This could pose a downside risk of about 0.2 percentage points to India’s FY26 GDP growth forecast, which the RBI currently projects at 6.5 percent.
Key Sectors and Companies Hit Hard
The impact of the higher tariffs is expected to be most significant on sectors like pharmaceuticals, gems, and textiles. Across the board, market sentiment was down, with all broad market indices trading in the red.
The Nifty Midcap 100 declined by 0.84 percent, and the Nifty Smallcap 100 fell by 0.63 percent. Sectoral indices also saw considerable drops, including Nifty Oil & Gas (down 1.61 percent), Nifty Auto (down 0.98 percent), Nifty Pharma (down 0.64 percent), and Nifty IT (down 0.8 percent).
Among the top Nifty companies that experienced significant losses were Mahindra & Mahindra, Reliance Industries, Dr Reddy’s Laboratories, and Bharti Airtel Ltd.
Beyond Tariffs: Other Market Pressures
The market’s downturn wasn’t solely due to the tariffs. Investor sentiment was also dampened by the US Federal Reserve’s decision to keep interest rates unchanged at 4.25-4.5 percent, despite some internal dissent. Continuous selling by foreign investors further contributed to the negative market mood.
- New US tariffs of 25% on Indian goods caused a significant drop in Sensex and Nifty.
- Experts predict a short-term negative impact on Indian exports and GDP growth.
- Key sectors like pharmaceuticals, gems, and textiles are most vulnerable to the tariffs.
- Other factors, including the US Fed’s unchanged interest rates and foreign investor selling, also contributed to market decline.
As negotiations continue, market participants will be closely watching for any signs of de-escalation in the trade tensions.
