Stock markets in India experience a decline due to Trump's renewed threats of tariffs on Russian oil purchases.
The Indian stock market faced a turbulent day as various factors came into play. IndusInd Bank named Rajiv Anand as its CEO for a three-year term, causing the bank to rise 1.9%, but this was overshadowed by other developments.
On the negative side, the Reserve Bank of India is expected to hold its key rate at 5.50% in its policy decision on Wednesday. The BSE Sensex lost 0.38% to 80,710.25, and the broader small-cap and mid-cap indexes also declined. Twelve of the 16 major sectors declined in the Indian stock market.
One of the significant factors affecting the market is the increased U.S. tariffs on Indian goods. These tariffs, especially the steep 50% tariff introduced in 2025, are expected to negatively impact India's economic growth and key sectors.
Moody's and other analysts warn that these tariffs could slow India's GDP growth by about 0.3 to 1 percentage point for fiscal year 2025-26, reducing the growth outlook from around 6.3-6.5% to a lower level. This could undermine India's manufacturing and export ambitions, especially in higher value-added sectors like electronics, which may reduce foreign investments and hurt corporate earnings in those sectors.
The tariff increase comes alongside concerns over India's continued purchases of Russian oil, which triggered the additional 25% tariff, raising the total to 50%. This is hitting sectors related to energy trade.
Major indices Sensex and Nifty 50 are sensitive to macroeconomic growth and policy impacts. Slower GDP growth and export competitiveness pressures typically depress market sentiment and valuations. The IT sector, a major component of these indices, may face indirect impacts due to potential global trade tensions and cost pressures. However, increased geopolitical risk and trade uncertainty can influence investor confidence and earnings outlooks for IT companies exposed to U.S. markets.
The oil sector could be directly affected by visa and tariff-related trade restrictions, as the Indian imports of Russian oil face U.S. sanctions and tariffs, complicating supply chains and profitability.
Stocks exposed to the U.S., particularly pharma and information technology, fell in the Indian stock market. The Nifty 50 fell 0.3% to 24,649.55 points. Trump's tariff threat rattled the Indian rupee and stocks, potentially clouding the growth outlook. Weak earnings and foreign outflows weighed on the Sensex and Nifty, causing them to fall for the fourth week.
Exchange operator BSE dropped 4.8% due to news reports about potential talks to reduce speculation in the options market. Reliance Industries, India's largest company by market value, dropped 1.4% due to concerns over a potential shift in crude oil sourcing from Russia.
Yogesh Patil, CIO-equities at LIC Mutual Fund, expects U.S. trade uncertainty to keep Indian markets volatile in the short term. Kotak Mahindra Bank and TCS contributed to the drag on the Sensex and Nifty 50.
[1] Source: Reuters, Moody's, and other analysts. [3] Source: India's Ministry of Finance and the Securities and Exchange Board of India.
The Finance industry is watching with concern as the increasing U.S. tariffs on Indian goods may impact key sectors like energy and business, according to Moody's and other analysts. A slowdown in GDP growth due to these tariffs could potentially harm India's manufacturing and export ambitions, particularly in higher value-added sectors like electronics, which could lead to reduced foreign investments and corporate earnings.
In the Indian stock market, the oil sector could be directly affected by visa and tariff-related trade restrictions, as Indian imports of Russian oil face U.S. sanctions and tariffs, making it difficult for energy trade-related sectors.
