Indian Stocks Slip as Washington Turns Up the Trade Heat
- Sensex and Nifty dropped sharply after the US doubled tariffs on Indian exports to 50%.
- Experts warn the tariffs could trim India’s GDP growth by 30-40 basis points if prolonged.
- Ongoing US-India trade tensions are shaking investor confidence and prompting calls for policy response.
Benchmark equity indices plunged in early trade on Thursday, August 7, following US President Donald Trump's decision to double tariffs on Indian exports, triggering fears of a deepening trade standoff between the two nations.
The BSE Sensex dropped 335.71 points to 80,208.28 at the opening bell, while the NSE Nifty fell 114.15 points to 24,460.05. The slide reflects growing investor unease after the US raised tariffs on Indian goods from 25% to 50%, making India one of the highest-taxed US trading partners.
The steep tariff hike has raised concerns across export-driven industries and cast a shadow over India's economic outlook. Market experts say if the tariff regime remains in place for a year, it could shave off 30 to 40 basis points from the country’s GDP growth. “This is a serious escalation with the potential to impact growth and investor confidence”, said Dhiraj Relli, CEO of HDFC Securities.
Notably, Gift Nifty futures were trading at 24,586 as of 7:05 am, suggesting a flat-to-negative start for broader markets, marginally above Wednesday’s closing level of 24,574.2. However, the dollar-rupee one-month non-deliverable forwards (NDF) showed little change, indicating that the currency might open steady despite the trade tensions.
Before the tariff escalation, the Reserve Bank of India had maintained its GDP growth projection at 6.5% for the current fiscal year, citing resilience in domestic demand. But analysts now warn that persistent geopolitical friction with Washington could pressure India’s macroeconomic fundamentals and unsettle foreign investment flows.
“The doubling of tariffs, coupled with worsening bilateral ties, could shake markets out of their complacency”, warned Nilesh Shah, CEO of Kotak Mahindra Asset Management Company.
Investors are now awaiting a response from the Indian government, particularly from the Reserve Bank of India and the Ministry of External Affairs, as diplomatic channels are expected to engage to defuse the tension.
Meanwhile, global markets showed mixed reactions. Asian shares rose on Thursday, buoyed by optimism after US exemptions for firms like Apple cushioned the blow of Trump’s broader threat of 100% tariffs on chip exporters. MSCI’s Asian stock gauge advanced 0.8%, and tech giants like Nvidia and TSMC posted gains.
Crude oil also edged higher, snapping a five-day losing streak, while US Treasury yields ticked up slightly amid continued geopolitical maneuvering.
