E-Paper
Sensex, Nifty see worst day in three months. What drove the downturn?
The Nifty 50 fell 1.02% to 24,712.05 points and the Sensex lost 1.04% to 80,786.54 points after the US notified 25% additional tariff on India from 27 August.
India’s equity benchmarks—the 30-share S&P BSE Sensex and the NSE Nifty 50—had their worst trading session in three months today, so much so that they turned negative for August. The Nifty 50 fell 1.02% to 24,712.05 points and the Sensex lost 1.04% to 80,786.54.
Why so, though? Blame 50% US tariff on India.
On Tuesday, a US Homeland Security notification confirmed that Washington will impose an additional 25% tariff on all Indian-origin goods from Wednesday. Indian exports will face US duty of up to 50%—among the highest imposed by Washington—after President Donald Trump announced additional tariffs over New Delhi's purchases of Russian oil.
India’s real GDP growth rate could fall close to 60 basis points if the US tariffs are enforced, with engineering goods, auto components, gems and jewellery, marine and textiles among the most exposed sectors, according to brokerages.
Tariff concerns, coupled with muted earnings, have already prompted foreign investors to sell about $2.5 billion in August, the highest outflows since February.
Equities fell on Tuesday “as India-US trade negotiations are unlikely to materialise in the near term and erratic tariff decisions could impact economic growth in the coming quarters,” said Amnish Aggarwal, head of institutional research at PL Capital.
The benchmarks may see some knee-jerk, near-term jitters in the next few sessions as the real economic impact of the tariffs will only be evident after the implementation, he said.
Taking Stock
HDFC Bank Ltd. and ICICI Bank Ltd. fell about 1% each today while Reliance Industries Ltd. dropped about 2%. They are the top three weighted stocks on the benchmarks.
Consumer stocks were one of the few gainers, rising 0.9%, led by Britannia Industries Ltd. on expectations of lower goods and services tax on biscuits.
Among individual stocks, Ola Electric gained 4.6% after securing a compliance certificate for its Gen 3 scooter line-up. Telecom operator Vodafone Idea Ltd. slumped 9.3% after multiple media reports said the government was not considering additional relief on the company's pending dues.
Fifteen of the 16 major sectors logged losses, while the small-caps and mid-caps dipped 2% and 1.6%, respectively. In the currency markets, the Indian rupee continued its losing streak for a fifth consecutive session ahead of the tariffs.
The local markets are closed on Wednesday. Trading will resume on Thursday, a day after the US tariffs go into effect.
