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13-02-2025
WASHINGTON/ NEW DELHI: Indian stocks have lost about $180 billion in market value in the two days since US President Donald Trump said he would slap reciprocal tariffs on several countries, with many analysts saying the world’s fifth-largest economy could be worst hit.
The blue-chip NSE Nifty 50, opens new tab and BSE Sensex, opens new tab indexes sank 1.32% on Tuesday and have tumbled a shade over 2% in the past two sessions. The broader, more domestically focused mid-cap, opens new tab and small-cap, opens new tab indexes have slid a steeper 5%.
About 87%, or 2,532, of the 2,918 stocks listed on the National Stock Exchange declined on the day. In terms of market cap, the total value of all companies has fallen to $4.67 trillion from $4.85 trillion in the last two sessions.
The rout started after Trump said on Sunday that he would, later this week, announce reciprocal tariffs on all countries that impose duties on US goods.
Trump’s top economic adviser has said India has “enormously high” tariffs. That, analysts say, makes India vulnerable to reciprocal US tariffs, with Morgan Stanley and Citi estimating a hike of 4-6 percentage points.
“India likely to get hit the most among Asian countries. It is at high risk from potential US reciprocal levies due to its pronounced tariff differentials,” said Satish Chandra Aluri, an analyst at Lemonn Markets Desk.
Since November 25, when Trump first threatened tariffs, the Nifty has fallen 4.7%. That is much steeper than the drop in two of Trump’s main targets via tariffs China, which is up 1.7%, and Canada, which is up 1%. Only Mexico’s 5.4% drop is more than India’s.
“The markets now look forward to the upcoming meeting of (Indian Prime Minister Narendra) Modi with Trump later this week on hopes for any exemptions,” said Aluri.
To avoid a potential trade war, Modi is preparing tariff cuts and is also expected to propose increased energy and defence imports ahead of his two-day US visit from Wednesday.
The tariffs, if imposed, are likely to hurt key exports such as electrical and industrial machinery, gems and jewelry, pharmaceuticals, iron and steel, textiles, vehicles, apparel and chemicals, said Sonal Verma, chief economist at Nomura.
Among stocks, every one of the 13 major sectors dropped at least 1%. Among them, the most US-exposed pharma, opens new tab and IT, opens new tab tumbled 1.9% and 1.5%, respectively.
India has high tariffs that lock out imports, US President Donald Trump’s top economic adviser Kevin Hassett said on Monday, adding that India’s prime minister had a lot to discuss with Trump when the two leaders meet soon.
Trump believes the United States should impose reciprocal tariffs that are at least equal to those imposed by other countries, Hassett said in an interview with CNBC, adding, “If they go down, we’ll go down.”
“Almost every trading partner has much higher tariffs than we do,” he said, noting that Canada, Mexico and Britain had tariffs in the same range as the United States. Other countries, including Taiwan and India, had much higher rates.
Reuters reported earlier on Monday that Indian Prime Minister Narendra Modi is preparing additional tariff cuts ahead of a two-day visit to Washington from Wednesday.
Trump on Sunday said he plans announce new 25% tariffs on all steel and aluminum imports into the U.S. on Monday, on top of existing metals duties, and reciprocal tariffs on Tuesday or Wednesday, to take effect almost immediately. (Int’l Monitoring Desk)
