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Informist, Tuesday, Aug. 26, 2025

By Simran Rede

MUMBAI – The expiry of the deadline for additional 25% tariffs by the US on Indian imports on Wednesday is expected to further weigh on the market, according to analysts. Moreover, the expiry of the monthly contract of the Nifty 50 derivatives on Thursday is also likely to pull down the 50-stock index, the options data showed. 

Tuesday, the Nifty 50 index closed at 24712.05, down 255.70 points, or 1%, and the BSE Sensex closed at 80786.54, down 849.37 points, or 1%. Most index heavyweight stocks such as HDFC Bank, ICICI Bank, and Reliance Industries weighed on the Nifty 50 index. The index is seen falling to 24600–24500 points Thursday, according to technical analysts. Domestic equity market will remain closed Wednesday on the occasion of Ganesh Chaturthi. 

The overall bias towards the market is weak and unless the Nifty 50 sustains the 25000 level, a recovery in the index is unlikely, analysts said. The sentiment remains cautious ahead of the imposition of additional US tariffs on Wednesday at 0931 IST, taking the total to 50%. Persistent depreciation of the rupee has been adding pressure and may further impact foreign institutional inflows, Vinod Nair, Head of Research, Geojit Investments, said in a note.

The 50% levies on Indian imports in the US are expected to weigh on the outlook of Indian exports, limiting any sustained recovery in the currency. Meanwhile, geopolitical tensions surrounding the Russia-Ukraine conflict and ongoing peace talks continue to add volatility. In the near term, the Nifty 50 is likely to remain under selling pressure until it is below 24850 points, Rupak De, Senior Technical Analyst at LKP Securities, said in a note.

The market has not yet factored in the 50% US tariffs as it is not yet effective, and its impact on corporate earnings is expected to be seen in the coming quarters and years, said Dhananjay Sinha, chief executive officer and co-head of institutional equities at Systematix Group. "As of now the common assumption is that Indian economy and markets are endowed with a "Teflon coated" shield, which is an illusion", he said. 

On the trade deal between India and the US, Sinha said it is difficult to guess when and how the negotiations between the countries will evolve. However, once done, US tariffs could eventually settle to around 20%, will be much higher than the levels that existed before Trump's second regime at 3%, he said.

If the tariffs are not implemented following the expiry deadline of Wednesday, the market may witness a sharp short-covering with the Nifty 50 rising to 25200–25500 points, Saral Seth, research analyst at IndSec Securities, said. In a worst-case scenario, if Trump raises the tariffs to more than 50%, the Nifty 50 may fall to 24500–24000 levels. Seth expects the US and India to sign a trade deal by October with tariffs settling to 15-20%. Following the trade deal, the 50-stock index may rise 2000–3000 points, he said. Moreover, rising yields on gilts, which may go to 7%, are also key factors to monitor. The 10-year benchmark 6.33%, 2035 gilt closed at INR 98.08, or a yield of 6.5997%, against INR 98.10, or 6.5967% yield, Monday.

The introduction of potential reforms to goods and services tax by Diwali is expected to provide some support for domestic consumption. "However with income and employment scenario remaining weak and corporate continuing to dither from major capex, we think more policy support will be required," Sinha said. The impact of US import duties is likely to be larger than assumed. "The announcement of GST rate reduction and rationalisation is in response to the larger impact on India's growth, as reflected in significant deceleration in sales growth of companies at 3.9% in 1QFY26 (June quarter). In addition, the Indian government has taken measures like ELI (employment-linked incentive) and reduction in income tax incidence on households. In addition, the RBI has front-loaded monetary easing," he said.  End

Edited by Deepshikha Bhardwaj

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