Indian benchmark stock indexes trimmed losses on Thursday, recovering from a sharp drop in early trade, as investors viewed the U.S. tariff threat as a pressure tactic and hoped for lower rates once negotiations conclude. The Nifty 50 (.NSEI), opens new tab fell 0.35% to 24,768.35 points and the BSE Sensex (.BSESN), opens new tab lost 0.36% to 81,185.58. Get the latest news from India and how it matters to the world with the Reuters India File newsletter. Sign up here. The benchmarks fell nearly 1% in morning trade after U.S. President Donald Trump announced 25% tariffs on India, along with an unspecified penalty, from August 1, and added that the U.S. is still negotiating with the Asian country on trade.
Pankaj Pandey, head of retail research at ICICI Securities, said the initial market reaction was knee-jerk. The intraday recovery indicates that the "market is thinking of this as a pressure tactic. Something similar happened with South Korea, which reached a deal with the U.S. today at much lower 15% tariffs", he said. Nomura too said the elevated tariffs were unlikely to be permanent, and that the best-case outcome would be tariffs in the range of 15%-20%. Fourteen of the 16 major sectors ended lower on the day. The broader mid-caps (.NIFMDCP100), opens new tab and small-caps (.NIFSMCP100), opens new tab lost about 1% each. For the month, the benchmark indexes fell about 3% each, and the broader market underperformed, on persistent selling by foreign investors and as investors digested lacklustre earnings from IT companies and most financials. India's Nifty 50 snaps four-month winning streak in July Textile manufacturers such as Welspun Living (WLSP.NS), opens new tab, Vardhman Textiles (VART.NS), opens new tab, KPR Mills (KPRM.NS), opens new tab and Gokaldas Exports (GOKL.NS), opens new tab lost between 3.2% and 5.1% on the day, and were the worst hit by Trump's tariff threat. Adani Enterprises (ADEL.NS), opens new tab lost 4% after posting a drop in first-quarter profit due to weak coal demand. Consumer goods (.NIFTYFMCG), opens new tab sector jumped 1.4% and was the biggest sectoral gainer, led by heavyweight Hindustan Unilever (HLL.NS), opens new tab. The company added 3.4% after rural demand recovery and portfolio revamp supported its first quarter earnings. Graphite electrode maker HEG (HEGL.NS), opens new tab gained 7.3% after posting a multi-fold jump in first-quarter profit.
