25% tariff on India: SENSEX, NIFTY50 likely to slide on Thursday; check key concerns raised by experts

Donald Trump, in his post on X, said, “India is our friend. We have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country.

Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE—ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!”

Following the tariff rate announcement, Indian traders and investors anticipate a sharp reaction to the news on Thursday morning.

The GIFT NIFTY futures traded 147 points lower on Wednesday evening, erasing all the morning gains. However, experts believe the reaction to the tariff news on Indian markets could be limited. They say that the 25% tariff rate is already priced in the current NIFTY50’s price, as India was levied with 26% tariffs on April 2. In addition, the extra penalty that President Trump announced is yet to be ascertained.

Nilesh Shah, MD, Kotak Mutual Fund, said, "Markets will react negatively to the imposition of a tariff on India. Despite the unpredictable policymaking of the US, the market was expecting a tariff deal to work out as long-term US-India strategic interests are aligned."

Shah added, "Markets will hope for a 'TACO' trade if better senses prevail. China is defying US/UN sanctions on Iran oil, Myanmar and Russia trade, and North Korea support. Size and the competitiveness of the economy have their advantages.

On the stock and sector-specific front, the key sectors that are likely to face the major brunt of tariffs include gems & jewellery, electronics, metals, and pharmaceuticals. Electronic Manufacturing Services companies such as Dixon Technologies, Kaynes Technologies, and others may see a wild reaction on Thursday.

In addition, the tariff impact could pose a threat to the plans of key brands like Apple and Samsung, which aim to shift their supply chain to India from China.

The agricultural and allied industries' products will remain in focus as India continues to be a major exporter of fish, meat, and seafood products. Stocks like Avanti Feeds, Apex Frozen Food, and Mukka Proteins are expected to see sharp reactions on Thursday.