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Informist, Wednesday, Aug. 6, 2025

 

By Simran Rede

 

MUMBAI – Benchmark equity indices are likely to consolidate Thursday as investors are cautious amid India-US trade tensions after US President Donald Trump's announcement Tuesday of an increase in tariffs on imports from India to the US. Additionally, projections of high CPI inflation in the corresponding quarter of next year may also weigh on the market, analysts said.

 

Amid expectations of rising inflation, the Reserve Bank of India has maintained its estimates of real GDP growth at 6.5% for all the remaining quarters of the current financial year and for 2025-26 (Apr-Mar). Moreover, the RBI did not change the repo rate of 5.50% and also retained its "neutral" stance. "It is good for RBI to keep the rates unchanged and have money in its chest, if it needs to use that money in future if needed, given uncertainty over US tariffs," Ashutosh Mishra, head of research at Ashika Stock Broking, said. 

 

The central bank is unlikely to further reduce the repo rate after the 100-basis-point cut so far in 2025. It had trimmed the key rate by 140 bps during the Covid-19 pandemic. After this 100-bps cut, chances of a further 50-bps rate cut are very less as this situation is not as bad as it was during the Covid-19 pandemic, Mishra said.

 

Going ahead, tariffs by the US still remain a concern as it may have an impact on the earnings of export-oriented companies. "But we all know that the worst of the announcement has already been made that this much of the tariff will be there on India," Mishra said. Tuesday, Trump threatened he will "substantially" hike tariffs on Indian goods in the next 24 hours. He also threatened "small tariffs" on pharmaceuticals imported into the US, which will be raised to 150% in a year or year-and-a-half and then to 250%. 

 

The impact of tariffs on the market is a difficult task "...because of Trump operating in his own style, so predicting it has become very tough," he said. 

 

Wednesday, the Nifty 50 closed at 24574.20 points, down 75.35 points, or 0.3%, and the BSE Sensex ended at 80543.99 points, down 166.26 points, or 0.2%. The resistance for Nifty 50 is seen at 24700 points and support at 24500 points, according to Shrikant Chouhan, head of equity research at Kotak Securities. 

 

On the domestic front, defence stocks are likely to be in focus after the Defence Acquisition Council approved a series of capital acquisition proposals of around INR 670 billion, Siddhartha Khemka, head of research at Motilal Oswal Financial Services, said in a note. The Nifty India Defence closed 0.5% lower after closing higher for the past two sessions.  End

 

Edited by Deepshikha Bhardwaj

 

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