Trump's Tariff Threat Rattles Indian Markets: A Tough Start to Trading

Indian stock markets stumbled on Tuesday following President Trump's threat of a 25% tariff on rice imports. Indexes like Nifty 50 and BSE Sensex showed declines as market sentiment brown weaker amidst ongoing U.S.-India trade talks. Experts suggest markets await positive triggers despite global cues remaining mixed.

The Indian stock markets opened to heavy selling pressure on Tuesday after U.S. President Donald Trump's recent proposal of an additional 25% tariff on rice imports to the United States. This announcement has dampened hopes for relief during the ongoing visit of a high-powered U.S. trade delegation to India, causing market sentiment to waver.

The benchmark Nifty 50 index started the day at 25,867.10, witnessing a decrease of -93.45 points or -0.36%, while the BSE Sensex began trading at 84,742.87, plunging by -359.82 points or -0.42%. Market experts noted that the indexes have reached oversold territory and could react positively to any favorable developments.

Ajay Bagga, a Banking and Market Expert, commented that Trump's tariff remarks have worsened expectations for relief from the high-level U.S. trade delegation visit. The financial markets remain stressed with an 88% net short position by FPI and continued outflows amidst promoter selling and high primary market issuances. Investors worldwide are anxious as they await the Federal Reserve's interest rate decision on Wednesday.

During a White House meeting, President Trump revealed a $12 billion support package for American farmers, citing the challenges posed by imports to local producers and reaffirmed his resolve to implement corrective actions. The broad market saw significant pressure, with Nifty 100 down 0.56%, Nifty Midcap falling 0.81%, and Nifty Smallcap declining 0.84%, indicating widespread selling.

Weakness prevailed across sectoral indices on the NSE, with notable losses in Nifty Media, Metal, and IT sectors. Nifty Auto dropped 0.77%, Nifty Pharma slid 0.44%, and Nifty PSU Bank fell 0.72%. Ponmudi R, CEO of Enrich Money, observed that the Indian equity markets are treading cautiously, consolidating amid mixed global cues ahead of the critical U.S. Federal Reserve policy decision. The Nifty 50 is expected to retain its sideways-to-bullish trajectory as long as it remains above the 25,850 support level.

In the broader Asian market, Japan's Nikkei 225 was the only major index trading in green, gaining 0.35%. Meanwhile, Hong Kong's Hang Seng dropped 0.8%, Taiwan's weighted index decreased by 0.30%, and South Korea's KOSPI fell 0.72%, signaling regional market weakness.

(With inputs from agencies.)