Investor sentiment appeared cautious ahead of Thursday’s market opening, following the announcement of a 25% tariff, which weighs on benchmark indices Sensex and Nifty 50. Both indices opened lower, with concerns mounting around sectors reliant on exports.
As of 11:40 a.m. IST, the Nifty 50 was trading 0.26% lower at 24,791.45, while the BSE Sensex had slipped 0.28% to 81,259.37. Earlier in the day, both indices had declined nearly 0.9% during morning trade. The market movement came after President Donald Trump announced tariffs, though he mentioned that trade negotiations with India are still ongoing.
The broader trade implications are significant. The U.S. accounts for nearly 20% of India’s total exports. India's total exports for FY25 reached a record high of $824.9 billion. The jump from an average 3% tariff to a 25% rate plus a penalty for Russia trade could make Indian products less competitive compared to exports from countries like Vietnam and the Philippines, which have more favourable trade arrangements with the U.S. While India’s export base is diversified and its domestic economy remains resilient, the affected sectors may face increased scrutiny and volatility in the near term.
The Information Technology sector, although not directly targeted by the new tariff regime, could face indirect headwinds. Rising input costs and a slowdown in discretionary spending by American firms may weigh on demand for IT services.
Companies such as Infosys, HCL Technologies, Tech Mahindra, and LTIMindtree, which have significant exposure to U.S. retail and manufacturing clients, could come under pressure. In contrast, firms like Coforge, Persistent Systems, and Mphasis, which serve more diversified geographies and industries, may be relatively better positioned to weather the impact.
In the pharmaceuticals sector, current exemptions under the April 2025 reciprocal tariff framework mean that pharmaceutical formulations and APIs are not included in the new tariffs.
India currently supplies around 45% of generic drugs and 10–15% of biosimilars by volume to the U.S. market. Companies with strong U.S. manufacturing footprints, such as Cipla and Piramal Pharma, are likely to be more shielded, while Sun Pharma has previously stated it can pass on any additional costs to U.S. buyers, reducing the risk to margins.
In March 2025, President Trump announced 25% tariffs on imported vehicles (from April 3) and auto parts (from May 3), with temporary exemptions for USMCA-compliant parts. Indian auto part exports to the U.S. were worth $2.2 billion in FY24 (29.1% of total), making manufacturers vulnerable to demand and supply risks.
Companies like Samvardhana Motherson International and Bharat Forge generate a substantial portion of their revenue from North America and could face indirect pressure if U.S. demand weakens.
Steel and aluminium products are already subject to Section 232 tariffs and are excluded from the latest 25% import duties. However, trade tensions and global pricing pressures may cause near-term volatility in stocks like Hindalco Industries, Tata Steel, and JSW Steel. The sentiment surrounding the steel sector could drive investor caution even if the direct impact remains limited.
India supplies nearly one-third of U.S. textile and apparel imports. The imposition of a 25% tariff could erode India’s competitiveness, especially in high-margin fashion and speciality fabric segments. Lower-cost producers like Bangladesh and Vietnam may gain market share.
Companies with notable U.S. market exposure, such as Welspun India, KPR Mill, and Vardhman Textiles, could experience temporary selling pressure despite the relatively low share of exports. In early trade today, these companies' share prices tumbled between 3% and 6% after Trump's tariff and penalty threat.
Indian refiners like IOC, BPCL, HPCL, and Reliance may see profit pressure due to new tariffs. India sources 37% of its oil from Russia at discounted rates, which supports refining margins. A disruption in Russian supply could raise import costs. Reliance had agreed to buy up to 500,000 barrels a day from Russia this year.
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