Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:
- Tariff blow
- Defense stocks
- High-speed traders
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Indian stocks are set for a choppy session this morning after President Donald Trump threatened to impose a 25% tariff on the country’s exports to the US. The catch? He also said later that negotiations are still ongoing, leaving investors wondering what’s next. Meanwhile, earnings reports from Hindustan Unilever and Maruti Suzuki will be crucial in determining sentiment around consumer companies.
Trump’s tariff puts India at a disadvantage
President Donald Trump’s move to impose 25% tariffs on Indian imports, alongside penalties related to purchases of Russian crude, places India at a severe disadvantage versus Asian rivals like Indonesia, Vietnam and the Philippines. These nations are also vying for global manufacturing flows amid the ongoing “China 1” shift — a theme widely touted by top Wall Street firms. Should the tariffs remain, India’s electronics manufacturing sector, along with pharma and auto components, could cede ground to rivals across Europe and Asia, which have secured a better deal with Trump.
High-speed traders are in retreat: NSE
{{/usCountry}}High-speed traders are in retreat: NSE
{{/usCountry}}The defensive tone isn’t limited to stocks — risk aversion has also spilled into the trading infrastructure itself. High-frequency trading firms have cut back on their activity following the regulatory curbs and SEBI’s crackdown on Jane Street, a senior NSE official said in the post-earnings call on Wednesday. The timing, coming alongside rising geopolitical and trade uncertainty, could further impact sentiment around NSE shares in the private market, where valuations have come off following the action against Jane Street.
Defense stocks lose appeal as rich investors pull back
With geopolitical tensions cooling from their May-June peak, India’s defense stocks are on track for their second-worst monthly performance. A Nifty gauge of the sector is down nearly 12% in July, far underperforming the 3% drop in the broader benchmark. Despite strong gains in April and May, institutional investors remained largely on the sidelines in the June quarter. Meanwhile, wealthy individuals who chased the rally at elevated valuations are now facing the reality that fund managers never fully shared their optimism.
Analysts actions:
- DMart Raised to Equal-Weight at Morgan Stanley; PT 4,552 rupees
- Welspun Living Cut to Hold at Jefferies; PT 130 rupees
- Navin Fluorine Cut to Add at Avendus Spark; PT 5,210 rupees
Three great reads from Bloomberg today:
- Trump’s Tariffs Threaten to Deepen $248 Billion India Stock Rout
- Powell Bucks Pressure, Dissents in Showing Resolve on Inflation
- Big Take: ‘Entrepreneur of the Year’ Brings Bust to the AI Boom
And, finally..
Indian equities, already wobbling after a $230 billion selloff, could face fresh pressure now that Trump has imposed a 25% tariff on imports. The $5.2 trillion market is set to break a four-month winning streak, as weak earnings, foreign outflows, and steep valuations drag sentiment. The levies further dent rebound hopes and could accelerate global money flows to more attractive markets like South Korea and Hong Kong.