The Economic Times reports that Donald Trump’s tariff announcement is expected to cause a significant decline in the Indian stock market. This anticipation is evidenced by a 0.52% (129 points) drop in GIFT Nifty futures, trading at 24,725 at the time of the report.
Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company (AMC), predicts a negative market reaction. Despite a broad expectation of a trade deal between the US and India due to their aligned long-term strategic interests, Shah suggests that Trump’s unpredictable policy-making makes such a deal uncertain. He humorously refers to this unpredictability as a potential “TACO” trade, an acronym for “Trump Always Chickens Out,” indicating a scenario where Trump might back down from a deal.
The article highlights that export-oriented sectors in India are likely to bear the brunt of the tariffs. Garima Kapoor, Economist and Executive Vice President at Elara Capital, further elaborates on this, stating that the announced 25% tariff rate is particularly detrimental. This rate places India at a disadvantage compared to regional competitors like Vietnam, Indonesia, and the Philippines, which face lower tariff rates for similar labor-intensive and electronic goods. Such a disparity could significantly impact India’s competitiveness in these crucial export categories.
In summary, the market anticipates a weakening of Indian equities due to the new tariffs, with a notable dip already seen in GIFT Nifty futures. Experts underscore the negative implications, especially for export-driven industries, and express concern over the unpredictable nature of US trade policy, which could undermine expected strategic alignments and trade agreements between the two nations.