Donald Trump tariffs impact: Why are Nifty50, BSE Sensex down today? Top 6 reasons for stock market bear sentiment
Donald Trump tariffs impact on stock market: Benchmark indices, Nifty50 and BSE Sensex, tanked in trade on Tuesday after the US notified that 50% tariffs will come into effect on Indian exports. While Nifty50 dropped below 24,800, BSE Sensex also dipped almost 700 points. The market sentiment was severely affected, whilst other factors including currency fluctuations and foreign investor withdrawals contributed to the downward trend.
Why is the stock market down today? Top reasons
50% US tariffs notifiedTrading sentiment deteriorated after the Trump administration announced an additional 25% duty on Indian exports related to India’s Russian oil purchases, raising total tariffs to 50%. The Department of Homeland Security issued a draft notice on Monday outlining implementation details, whilst a scheduled August 25–29 visit by US trade representatives to New Delhi was unexpectedly called off.Indian exporters now face amongst the highest US customs duties worldwide, significantly exceeding those imposed on competitors like China, Vietnam and Bangladesh.Profit bookingInvestors secured profits after the previous week’s upward movement, which was driven by positive sentiment surrounding GST reform proposals, according to an ET report.Earlier this month, Prime Minister Narendra Modi announced plans to reduce GST rates across multiple product and service categories before Diwali.Also Read | ‘Strategic shock’: Donald Trump’s tariffs to hit 66% of India’s exports to US; China, Vietnam set to gainForeign Investment OutflowsForeign Institutional Investors (FIIs) withdrew Rs 2,466 crore from Indian equities on August 25, whilst Domestic Institutional Investors provided support through net purchases of Rs 3,176.69 crore.This withdrawal forms part of a larger exodus: FIIs have removed approximately Rs 31,889 crore across eight sectors in early August, particularly affecting financial and technology sectors. The month’s net equity sales have reached Rs 20,976 crore, following July’s withdrawals and increasing the year’s total outflows to approximately Rs 1.2 trillion.On August 13, Jefferies reported that foreign portfolio investor presence in India has reached its lowest level in a decade. Despite domestic investments providing some stability, analysts suggest that market recoveries may not be sustainable.Week rupeeThe Indian rupee declined for the fifth consecutive session on Tuesday, dropping 22 paise to 87.78 versus the US dollar during early trading, as market participants anticipated 50% tariffs on Indian products starting August 27.The currency’s downward movement intensified the negative sentiment in equity markets, as a declining rupee increases the cost of imports and affects company profits.Also Read | ‘Trump’s way of dealing with world a departure’: Jaishankar says recent experience taught India to not rely on a single market; asserts strategic autonomyGlobal market cuesThe decline in international stock markets contributed to the downward pressure on Indian markets, with Asian equities following US markets lower amidst uncertainty regarding Federal Reserve policies. MSCI’s comprehensive index of Asia-Pacific shares excluding Japan decreased 0.6%, whilst Japan’s Nikkei declined 1.1%.European and US futures indicated a tentative opening, with Euro Stoxx 50 futures declining 0.57%, German DAX futures falling 0.42%, and FTSE futures dropping 0.35%. US S&P 500 e-minis decreased 0.17%.Market sentiment deteriorated after President Trump warned of “subsequent additional” import duties targeting nations implementing digital taxes, prolonging the period of instability surrounding tariff regulations.Also Read | ‘Aggressive economic leverage’: JD Vance says Trump applied secondary tariffs on India to force Russia to stop war; ‘harder for Russians to…’Crude oil price riseCrude oil prices retreated slightly in early trading on Tuesday whilst remaining close to two-week peaks, raising concerns about increasing input expenses for Indian firms.Both oil benchmarks had risen approximately 2% during the previous session, with WTI moving above its 100-day moving average, as traders monitored the Russia-Ukraine situation for potential supply interruptions.Escalating crude prices risk reducing profits for fuel-intensive sectors, evidenced by the oil and gas index declining almost 1% during the session.
