India's stock market decline significantly following renewed concerns about an imminent U.S. tariff hike

India’s stock market has experienced a massive sell-off amid rising macro uncertainty. The country’s heavyweight Reliance Industries dragged its stock benchmarks into their worst performance in months as investors brace for imminent U.S. tariffs.

India’s equity market has pulled back sharply, pulling its benchmark shares along. The heavyweight Reliance Industries has declined sharply following rising concerns of possible renewed U.S. tariff hikes on Indian exports to the U.S. As a result, Indian benchmark indices recorded their worst single-day drop in four months. The last time India’s stock market experienced such a steep decline was on August 26, 2021.

India benchmarks fall alongside the country’s stock market

Data from Google Finance shows that the Sensex index declined by 0.93% while the Nifty 50 index lost 1.04%. The two benchmark indices have declined by 1.8% and 1.7% respectively, in the last seven days. Equities in all 16 major sectors in the Asian country ended lower on Thursday due to consistent outflows that reigned the markets despite fresh efforts and surprise interventions by the Reserve Bank of India. Indian seafood exporters Apex Frozen and Avanti Feeds also fell by 7.8% and 8.6% respectively.

Gokaldas Exports and Pearl Global Industries suffered considerable losses amid the chaos, with near double-digit declines. Gokaldas Exports declined by 8.5% while Pearl Global dropped by 7.9%. Gokaldas Exports and Pearl Global Industries are publicly listed Indian apparel manufacturers and exporters on the Indian stock exchange. The two companies derive more than half of their revenue from the U.S. market and were therefore among the most affected.

Metal shares declined by 3.4% logging their most significant single-day decline in nine months. On the other hand, Gas and oil stocks (NIFOILGAS) experienced their worst session in nine months, dipping 2.8%. Reliance Industries lost 2.2% as investors assessed Trump’s plan to import Venezuelan crude oil. The IT index also fell, shedding 2% after recording 2.4% gains in the last two sessions. Larsen & Toubro, as well as BHEL, lost 3.1% and 10.5%, respectively.

The Indian rupee also ended lower on Thursday as investors remain cautious. Foreigners who had invested in the country’s stock market have liquidated shares worth $900 million since the beginning of the year, despite achieving record sales of $19 billion in 2022.

Anita Gandhi, head of institutional business at Arihant Capital Markets, said that the markets are not “comfortable with the uncertainty over tariffs,” citing an imminent move by the U.S government to hike tariffs on Indian exports.

Trump could hike India’s tariffs from 50% to 500%

India is the second-largest buyer of Russian crude, and the United States is considering imposing tariffs of up to 500% if the Asian country continues to import Russian crude oil. The U.S. had warned India of higher tariffs over the matter of crude oil trading.

A previous report by Cryptopolitan, dated January 7, noted that India was still trading with Russia despite urging the U.S. government to halve tariffs on Indian goods. The U.S. has imposed tariffs of up to 50% on its exports to the U.S. The report mentioned that India reached out to the White House and attempted to negotiate a tariff cut, stating that it had reduced its trade relations with Russia over crude oil.

The report referenced data from an energy analysis indicating that India’s importation of Russian crude oil declined in December. However, the decline did not emanate from the state’s purchases. The analysis revealed that the drop was recorded following Reliance Industries’ importation, which occurred after U.S. sanctions were imposed on Lukoil and Rosneft. Mukesh Ambani owns Reliance and has been purchasing large quantities of Russian crude before the sanctions were imposed.

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