Benchmark stock indices opened Thursday’s trading session on a weak footing, reacting to fresh trade tensions triggered by U.S. President Donald Trump’s announcement of an additional 25% tariff on select Indian exports, citing New Delhi’s continued imports of Russian oil.
The Sensex opened nearly 250 points lower and was trading down 131.05 points at 80,412.94 by 9:22 am, while the Nifty50 slipped 67.25 points to 24,506.95. The early session hinted at high volatility, with traders preparing for wild swings amid a mix of global and domestic headwinds.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that while there is room for negotiation, uncertainty is high. “The 21-day window for the additional 25% tariff to take effect leaves room for negotiation and an eventual deal with the US,” he said. “But there is huge uncertainty surrounding the trade policy and to what extent both nations will be willing to make compromises.”
Vijayakumar added that President Trump is “unlikely to budge significantly from his unjustified stand,” especially after extracting concessions from other major trade partners. “Unfortunately for India, the U.S. is bargaining from a position of strength. India’s response has been mature and measured,” he said.
From a market standpoint, he expects continued weakness in the near term, particularly in export-focused sectors. “Since uncertainty is high, investors should be cautious in their approach. At least in the near-term, export-oriented sectors will remain weak. Domestic consumption themes like banking and financials, telecom, hotels, cement, capital goods and segments of automobiles will remain resilient.”
Santosh Meena, Head of Research at Swastika Investmart, echoed similar sentiments. “This move was largely anticipated by the markets, as President Trump had earlier hinted at such a development. As a result, there is no fresh negative surprise,” he said, noting that the 20-day gap before implementation and the planned U.S. trade delegation’s visit to India on August 24 leave the door open for diplomacy.
Meena sees the tariff hike as part of Trump’s larger “aggressive negotiation strategy,” aimed at extracting a favourable trade deal. “India has shown resistance-particularly in protecting its agriculture and dairy sectors, which are politically and economically sensitive,” he added.
He also stressed that India’s economic structure offers some insulation. “India remains a domestic consumption-driven economy, with limited direct exposure to the U.S., except in key sectors like IT, pharmaceuticals, and electronics,” he said-sectors which are exempt from the current tariff list. However, “textiles, gems & jewellery, and leather may face sentimental pressure in the near term.”
WHAT SHOULD INVESTORS DO?
Meena advises long-term investors to stay put. “This development is a part of ongoing global trade tensions and shouldn’t distract from India’s long-term growth potential,” he said, adding that any sharp correction could be a buying opportunity, with earnings momentum likely to pick up from the next quarter.
For short-term traders, however, caution is key. “The short-term outlook remains uncertain due to a combination of muted Q1 earnings, stretched valuations, and global trade tensions. Market texture appears weak in the near term, so a defensive and selective approach is advisable,” Meena said.
Adding to the bearish mood, Prashanth Tapse, Senior VP (Research) at Mehta Equities, flagged multiple red flags for Dalal Street. “Bears are likely to take control of Dalal Street today amid multiple headwinds-Trump’s tariff hike on Indian goods, heavy FII selling (7,588 crore this week), a weak Q1FY26 earnings season, rupee depreciation towards 87.83, and a deteriorating Nifty technical setup,” he said.
Tapse also highlighted concerns over the RBI’s policy tone. “The RBI’s neutral stance despite holding repo rates at 5.5% is seen as hawkish, further dampening sentiment,” he noted, adding that “with Nifty now eyeing support at 24,473 and 24,046, the outlook has turned decisively bearish.”
As trade tensions escalate and global cues turn murkier, investors are likely to tread with caution, especially in export-linked pockets of the market, while defensives and domestic stories may offer some shelter in the storm.