Indian stock market opens in red after Donald Trump's 50% tariffs on India

By Admin

07 Aug, 2025

The Indian stock market opened sharply lower on Thursday, August 7, following a major escalation in trade tensions between India and the United States. The dip in investor confidence came after US President Donald Trump announced a steep 25% increase in tariffs on Indian exports, effectively doubling them to 50%.

At the opening bell, benchmark indices reflected the market's apprehension. The BSE Sensex plummeted by 335.71 points, falling to 80,208.28, while the NSE Nifty declined 114.15 points to settle at 24,460.05. These numbers highlight the immediate impact of Washington’s aggressive tariff policy on India's financial markets.

The shockwave was further amplified by the fear that India may now be classified among the highest-taxed US trading partners. This abrupt escalation has sparked concerns of a prolonged trade standoff, potentially affecting India’s export-driven sectors, particularly textiles, pharmaceuticals, and information technology services.

Gift Nifty futures, which serve as an early indicator of market performance, traded at 24,586 points around 7:05 am   suggesting a flat-to-negative opening for the broader Indian market, closely aligning with Wednesday's close.

Despite these developments, the currency market remained relatively calm. The one-month dollar-rupee non-deliverable forwards (NDF) showed little movement, implying that the Indian rupee may open steady and be shielded from immediate volatility.

Economists and market analysts are beginning to sound alarms over the long-term economic implications. Dhiraj Relli, CEO of HDFC Securities, projected that India’s GDP growth could take a hit of 30 to 40 basis points if the tariffs remain in place for a year.

Interestingly, the Reserve Bank of India (RBI), prior to the tariff hike, maintained its GDP growth forecast at 6.5% for the financial year, seemingly brushing aside global uncertainties for now.

However, seasoned market watchers like Nilesh Shah, CEO of Kotak Mahindra AMC, cautioned that ongoing tensions between New Delhi and Washington could lead to an erosion of investor confidence. “The doubling of tariffs, coupled with worsening bilateral ties, could shake markets out of their complacency,” Shah said.

What Lies Ahead?
Markets are now waiting for policy responses from both governments. Investors are particularly attentive to any signals from the RBI and the Indian government regarding trade diplomacy or possible countermeasures. A resolution could restore confidence, while continued silence or conflict may fuel further market instability.

Meanwhile, in contrast to India, Asian markets posted gains. MSCI’s gauge of Asian stocks rose by 0.8%, buoyed by exemptions in Trump’s broader tariff strategy   particularly sparing companies like Apple Inc., which have significant US investments. US equity futures also climbed modestly, with contracts for the S&P 500 and Nasdaq 100 gaining 0.3%.

Tech stocks performed robustly in international markets, with Nvidia Corp., Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. seeing after-hours gains of 1.9% to 4.4%.

Meanwhile, oil prices inched up following a five-day decline, as the market tracked US efforts to penalize buyers of Russian crude and diplomatic maneuvers related to the Ukraine war.

Conclusion:
Trump’s decision to ramp up tariffs on Indian exports has rattled Indian markets and opened a new chapter in Indo-US trade relations. While the short-term impact is already visible in equity indices, the long-term effects on GDP, currency stability, and sectoral performance will depend heavily on diplomatic negotiations and economic strategies undertaken in the coming weeks.

Investors are advised to stay cautious and closely monitor both domestic policy actions and geopolitical developments to better navigate the uncertainty.