FPJ News Service New Delhi

Following a stormy start driven by tariff threats from the US President Trump, markets started on a pessimistic note on Thursday. Halting its two-day rally, the 30-share BSE index declined 296.28 points to settle at 81,185.58 after recovering some lost ground during the afternoon trade. During the morning session, the index tanked 786.71 points to 80,695.15. The 50-share NSE Nifty dropped 86.70 points to 24,768.35.

“Thought the market attempted a strong recovery, it closed the day with marginal losses (on the monthly expiry day). Investors gravitated toward domestically oriented, non-discretionary players, especially FMCG, which offered attractive valuations, demand outlook and relative insulation from tariff risks. In contrast, oil and gas stocks were the worst hit due to US warnings over Indian energy imports. Overall, the market reflected a cautious yet selective approach. Market continues to hold high hopes for a more favorable tariff outcome in the near-term,” said Vinod Nair, head of research, Geojit Investments.

“The 25 % tariff on India plus an unspecified penalty for energy and defence-related purchases from Russia is very bad news for Indian exports and thereby on the growth prospects of the Indian economy in the short run. Since trade negotiations with India are continuing, perhaps, the 25 % tariff may come down eventually. But certainly, there is a short-term hit to Indian exports and GDP growth. This short-term hit will reflect in the stock market, too, in the short-term. 

“From the investor perspective it is important to understand that the 25 % tariff will come down after the negotiations which start in mid-August. The 25% tariff imposed on India is far higher than the rates reached in trade deals with other countries. This is the typical Trumpian strategy to get better deals from India in other areas and finally settle at a tariff rate around 20% or less. Nifty is unlikely to go below the support level of 24500. Investors can buy the dip focusing on domestic consumption themes,” said veteran investment strategist Dr VK Vijayakumar.