Indian markets opened sharply lower on Thursday, July 31, following a move by U.S. President Donald Trump to impose a new set of tariffs on Indian imports. The action—characterized as a significant escalation in trade tensions—sent investor sentiment into a tailspin and triggered widespread selling in the market.
In a live address Wednesday evening, Trump imposed a 25% tariff on the vast majority of Indian imports, citing what he characterized as “unfair trade practices.” He suggested still more penalties in the works, but did not offer any specifics. The news was greeted with swift alarm from market participants, who worry about reciprocal actions from India and a generalized slowdown in international trade.
Benchmark Indices Slip Nearly 1%
The Sensex benchmark opened at 80,695.50, sharply lower than the closing figure of 81,481.86, and rapidly fell almost 1% to an intraday low of 80,695.15. Nifty 50 also reflected the decline, opening at 24,642.25 and falling to a low of 24,635.00, against the close of Monday at 24,855.05.
The effect was not confined to large-cap shares. Mid- and small-cap indices saw an even sharper decline, as the BSE Midcap and Smallcap indices dropped by as much as 2%, highlighting the pervasive extent of the sell-off.
Stock Market Creeping Towards Recovery
Market analysts opine that the surprise tariff move has introduced near-term volatility and uncertainty. The fear of further U.S. action against Indian trade has also frightened investors, several of whom are now in wait-and-watch mode.
While the markets did drop initially, there were some indications of stabilising later. By mid-morning, the Sensex had rallied modestly to 80,989.45, which implies that bargain buying and institutional support could be capping further losses at least for now.
But experts caution that volatility may continue in the next sessions, particularly if diplomatic tension heightens or no clarity emerges on future trade policy. Investors are advised to be cautious until the broader implications of Trump’s action emerge.
Trump claims India Will Pay A penalty for backing Russia
Apart from the 25% tariffs on imports, Trump also talked about a penalty for India. This is the result of India’s arms and oil business with Russia. In his statement, he penned, “Also, they have always purchased a huge percentage of their military gear from Russia, and are Russia’s biggest shopper of ENERGY, with China, at a time when everybody wants Russia to STOP THE KILLING IN UKRAINE — ALL BAD THINGS NOT GOOD! INDIA WILL BE THEREFORE PAYING A TARIFF OF 25%, PLUS A FINE FOR THE ABOVE, beginning on AUGUST FIRST. THANK YOU”
Trump’s aforementioned sanctions have not been announced yet. What his sanctions will be and how they will affect the market is yet to be seen.
