Indian Shares Decline Amid Uncertainty Over Trump's Tariff Plans
Indian Shares Decline Amid Uncertainty Over Trump’s Tariff Plans
India’s stock market declined on Tuesday amid concerns regarding Donald Trump’s intentions for India, following the U.S. President’s announcement of trade tariffs on neighboring nations shortly after taking office. The Nifty 50 (.NSEI) dropped 1.37%, closing at 23,024.65, while the BSE Sensex (.BSESN) fell 1.6% to finish at 75,838.36. Investors globally reacted to Trump’s declarations, as he proposed universal tariffs and revealed trade tariff plans for Mexico and Canada to take effect on February 1.
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This stirred apprehension among domestic investors regarding potential actions directed at India. During his campaign, Trump threatened to impose tariffs on nations including India, Brazil, and China. “The uncertainty surrounding Trump’s tariff strategy for India unsettled domestic markets today, leading to increased volatility,” commented G Chokkalingam, founder and head of research at Equinomics Research.
Volatility (.NIFVIX) surged to 17, marking the highest level since August 6, 2024. All 13 major sectors experienced declines, with smallcaps (.NIFSMCP100) and midcaps (.NIFMDCP100), which are more focused on domestic markets, each falling approximately 2.3%. Trump’s U.S. policy approach could influence the dollar’s strength and Treasury yields, possibly leading to higher inflation, which might result in fewer cuts to interest rates.
Consequently, this could deter foreign investment from emerging markets like India. Indeed, foreign portfolio investors (FPI) have divested approximately $6.7 billion from Indian stocks and bonds throughout January. Among the individual stocks, online food delivery service Zomato (ZOMT.NS) saw a 10.5% decline, continuing its downward trend from the prior session following a drop in its profits for the December quarter.
Mankind Pharma (MNKI.NS) experienced a 5.4% decrease after Macquarie downgraded its rating to “underperform,” citing challenges in its domestic formulations sector. Conversely, Apollo Hospitals (APLH.NS) increased by 2%, marking the largest gain on the Nifty 50 after Kotak upgraded the stock to a “buy” rating.
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