The Indian stock market opened sharply lower on Thursday after US President Donald Trump imposed a steep 26% tariff on imports from India. At the opening bell, the BSE Sensex dropped by 504.28 points or 0.66%, settling at 76,113.16. Meanwhile, the Nifty 50 index lost 145 points or 0.62%, opening at 23,187.35.
This announcement came during a press briefing at the White House Rose Garden. Trump declared a global tariff hike, targeting more than 180 countries. India received one of the harshest rates at 26%, sending shockwaves across financial markets. He set a minimum tariff of 10% on all imports and slapped higher rates on key trading partners — 34% for China, 20% for the European Union, 24% for Japan, and 25% for South Korea.
Bloodbath on Dalal Street
Investors reacted swiftly to the development. Almost every sector on Dalal Street faced selling pressure. Heavyweights in the IT, metal, and export-driven sectors led the declines. Companies with significant exposure to US markets felt the heat more acutely.
Infosys, Wipro, and TCS opened in the red as fears over reduced demand and increased pricing pressure took center stage. Tata Motors and Mahindra & Mahindra also faced selling pressure due to their export businesses and potential cost implications.
Brokerages downgraded several Indian stocks with US exposure. Analysts cited a deteriorating trade outlook and the possibility of retaliatory tariffs from other countries as primary concerns.
Global Selloff Intensifies
Asian markets mirrored the panic. Japan’s Nikkei 225 plummeted 3.9% in early trading, touching an eight-month low. Nearly every index component saw losses, with banks, shipping companies, insurers, and exporters suffering significant damage.
South Korea’s KOSPI and Hong Kong’s Hang Seng Index also posted heavy losses, dropping over 2.5% and 3%, respectively. Australia’s ASX 200 and China’s Shanghai Composite faced steep declines as well.
In the United States, Nasdaq futures fell by 4%. After-hours trading wiped off nearly $760 billion in market capitalization from the “Magnificent Seven” tech giants. Apple, which manufactures most of its iPhones in China, lost almost 7%.
S&P 500 futures dropped 3.3%, while FTSE futures shed 1.8%. European markets, already under pressure from inflation and sluggish growth, braced for deeper losses with futures trading nearly 2% lower.
Safe Haven Assets Rally
As panic spread, investors moved into traditional safe havens. Gold prices jumped sharply in Asian trading. Spot gold rose by over 2%, nearing $2,400 per ounce. Traders sought safety amid uncertainty over trade routes, supply chains, and the broader economic outlook.
The Japanese yen surged against major currencies, with the dollar/yen pair falling to a two-month low. Bond markets rallied globally. The yield on 10-year US Treasuries dropped by 14 basis points to 4.04%, marking a five-month low.
US rate futures showed increased bets on interest rate cuts in the second half of 2025. Traders now expect the Federal Reserve to take action to counter the economic damage from shrinking trade and slowing growth.
Trade and Economy in Crosshairs
Trump’s announcement shook the foundation of global trade. By targeting allies and adversaries alike, the White House signaled a radical shift in policy. Economists warned that the move could cripple global supply chains and force companies to reconsider manufacturing and procurement strategies.
India’s export sector, particularly pharmaceuticals, IT services, textiles, and automotive parts, faces heightened risk. The 26% tariff severely reduces price competitiveness for Indian goods entering the US. Exporters will either absorb the additional cost or pass it on to American consumers, potentially hurting demand.
Finance Ministry officials in New Delhi held emergency consultations with the Commerce Ministry and industry leaders. A senior official hinted at possible retaliatory tariffs but emphasized the need for calibrated action. India’s external affairs ministry has yet to issue a formal response, but diplomatic discussions with Washington appear imminent.
Market Sentiment and Forward Guidance
Traders and fund managers have turned cautious. Foreign institutional investors (FIIs), already net sellers in recent sessions, accelerated outflows. Domestic institutional investors (DIIs) tried to provide some cushion, but the selling pressure proved too strong.
Volatility spiked. The India VIX index jumped over 15%, signaling rising fear and uncertainty. Analysts expect increased choppiness in the near term. Market participants will track further US policy announcements and India’s diplomatic response.
Brokerage firms issued fresh advisories for clients. Most recommended a shift toward defensive sectors such as FMCG, utilities, and domestic consumer plays. They also advised reducing exposure to export-heavy stocks until clarity emerges.
Long-Term Implications
If India and the US fail to resolve the issue diplomatically, the situation could escalate. A full-blown trade war remains a possibility, which would weigh heavily on GDP growth, corporate earnings, and employment across sectors.
Several multinational corporations could re-evaluate their India strategies. Increased tariffs may discourage further investment in export-focused operations. Startups and mid-size enterprises catering to international markets will face stiff challenges in cost management and pricing.
The Reserve Bank of India may come under pressure to reassess its monetary policy stance. A slowdown in trade and investment could prompt the central bank to consider easing measures. However, inflation risks and global uncertainty may restrict its options.
Conclusion
The Indian markets have entered turbulent waters following President Trump’s sweeping tariff announcement. With a 26% tariff on Indian imports, the cost burden on exporters has increased drastically. Dalal Street responded with sharp declines, reflecting investor anxiety and global cues.
As the situation evolves, policymakers must act swiftly to safeguard India’s trade interests. Meanwhile, investors should brace for heightened volatility and monitor developments closely. The coming days will prove crucial in determining whether the market stabilizes or dives deeper into correction territory.
