Markets magnify opening losses in early deals amid new Trump tariff threat

Indian equity benchmarks made flat-to-negative start on Tuesday and soon extended their losses in early deals amid fresh threat from the US President Donald Trump to impose higher tariffs on India over Russian oil purchase. Some concern came as think tank GTRI said the additional 25 per cent import duty announced by US President Donald Trump on Indian goods could lead to a 30 per cent decline at $60.60 billion in India's exports to America this fiscal. Sustained selling by foreign portfolio investors (FPIs) also dampened market sentiments. On Monday, foreign portfolio investors (FPIs) were net sellers to the tune of Rs 2,566 crore worth of Indian equities. Besides, investors are eyeing the ongoing the RBI Governor Sanjay Malhotra-headed rate-setting panel’s three-day deliberations to decide the next bi-monthly monetary policy amid expectations of pause in the rate easing cycle.

On the global front, Asian markets are trading mostly higher, following the broadly positive cues from Wall Street overnight, amid optimism the weak monthly US jobs data will lead the US Fed to lower interest rates next month. Back home, aviation stocks are in focus as the global airlines' grouping International Airport Transport Association (IATA) report showed that India emerged as the world's fifth biggest aviation market, handling 211 million passengers, while Mumbai-Delhi was one of the busiest airport pairs in 2024.

The BSE Sensex is currently trading at 80659.84, down by 358.88 points or 0.44% after trading in a range of 80654.49 and 81010.49. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.37%, while Small cap index was up by 0.03%.

The few gaining sectoral indices on the BSE were Power up by 0.34%, Basic Materials up by 0.18% and Industrials up by 0.02%, while Oil & Gas down by 1.06%, Energy down by 0.78%, Realty down by 0.70%, IT down by 0.66% and Healthcare down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 0.79%, Axis Bank up by 0.70%, Maruti Suzuki up by 0.69%, SBI up by 0.59% and Bharti Airtel up by 0.55%. On the flip side, Adani Ports & SEZ down by 1.45%, Bharat Electronics down by 1.30%, Infosys down by 1.12%, HDFC Bank down by 1.04% and Sun Pharma down by 0.82% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) has said that the additional 25 per cent import duty announced by US President Donald Trump on Indian goods could lead to a 30 per cent decline at $60.6 billion in India's exports to America this fiscal (FY26) from $86.5 billion in FY25. To help exports, it suggested the government to revive the interest equalisation scheme, create a helpdesk, use trade agreements strategically, and onboard new exporters. India now faces a 25 per cent country-specific tariff and an extra unspecified penalty on its exports to the United States -- one of the highest among Asian exporters, second only to China at 30 per cent. In contrast, competitors such as Vietnam (20 per cent), Bangladesh (18 per cent), Indonesia, Malaysia, and the Philippines (19 per cent), and Japan and South Korea (15 per cent) enjoy lower rates. This puts Indian exports at a clear disadvantage across most sectors, barring a few exemptions.

The new US tariff regime excludes pharmaceuticals, energy products, critical minerals, and semiconductors. GTRI Founder Ajay Srivastava said India's garment exports are among the worst hit. He said knitted and woven garments -- each worth $2.7 billion -- now face steep US tariffs of 38.9 per cent and 35.3 per cent, much higher than the rates for Vietnam, Bangladesh, and Cambodia, and added that made-up textiles like towels and bedsheets, which earn India $3 billion in exports (with nearly half going to the US), now face a 34 per cent duty. This gives a clear advantage to competitors like Pakistan and Vietnam.

He also said that India's $2 billion shrimp exports, which make up 32 per cent of global supply, will now face a 25 per cent US tariff. He added this wipes out their price edge over rivals like Canada and Chile, who benefit from free trade deals with the US. Jewellery exports worth $10 billion -- 40 per cent of India's global jewellery trade -- now face a 27.1 per cent duty. With the sector adding just 3-4 per cent in value, margins are thin. Mechanical gold jewellery exports to the US ($3.6 billion) are likely to be hit the hardest. India's $4.7 billion in metal exports -- mainly steel, aluminium, and copper -- will also suffer, as the higher cost is expected to curb demand from US infrastructure and energy buyers.

India's engineering exports -- $6.7 billion in machinery and $2.6 billion in auto parts -- now face over 26 per cent US tariffs, making them costlier than similar goods from Mexico (zero tariff) and Japan (15 per cent). He said Petroleum exports worth $4.1 billion are still tariff-free, but India's use of Russian crude could invite penalties, and added pharmaceuticals ($9.8 billion) and smartphones ($10.6 billion) are currently exempt, but not safe -- Trump has warned of tariffs on Indian medicines and tighter rules on electronics with Chinese parts. He added that exporting more to other countries to make up for losses in the US market won't be easy. He said Trump's 27.1 per cent tariff on India's $10 billion diamond and jewellery exports, 40 per cent of its global trade in the sector -- delivers a ‘heavy blow’ to the sector. With value addition barely 3-4 per cent, margins are wafer-thin, and such duties can turn exports instantly unviable.

The CNX Nifty is currently trading at 24615.40, down by 107.35 points or 0.43% after trading in a range of 24610.35 and 24733.10. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.40%, Grasim Industries up by 0.89%, JIO Financial Services up by 0.70%, Axis Bank up by 0.62% and SBI up by 0.54%. On the flip side, Adani Enterprises down by 1.52%, Bharat Electronics down by 1.41%, Adani Ports & SEZ down by 1.36%, Infosys down by 1.20% and Reliance Industries down by 0.89% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 275.3 points or 0.68 to 40,566.00, Taiwan Weighted rose 243.28 points or 1.04 to 23,622.22, KOSPI increased 44.51 points or 1.41 to 3,192.26, Jakarta Composite gained 32.18 points or 0.43 to 7,496.83, Shanghai Composite strengthened 18.82 points or 0.53 to 3,602.13 and Straits Times was up by 18.79 points or 0.45 to 4,216.02, while Hang Seng declined 6.45 points or 0.03 to 24,727.00.