By Bharath Rajeswaran and Vivek Kumar Midadeshankar
("DIWIDA" |) -Indian shares are set to open lower on Thursday and remain under pressure after U.S. President Donald Trump imposed a 26% reciprocal tariff on imports from the South Asian nation, a level that caught some analysts by surprise.
The GIFT Nifty futures were trading lower by 0.22%, sitting at 23,178.5 points as of 8:30 a.m. IST. This suggests that the benchmark Nifty 50 index might start the day beneath Wednesday’s closing mark of 23,332.35.
The Indian rupee is similarly expected to decrease, influenced by the downturn in Asian stock and foreign exchange markets. [INR/]
Trump's tariff announcement on India on Wednesday was part of his plan to impose a 10% baseline tariff on all trade partners from April 5, with higher duties on dozens of other countries, including 34% on China from April 9.
Macquarie analysts said the 26% reciprocal tariffs on India are "much worse than what we had anticipated".
It seems likely that U.S. effective tariffs, even after negotiations, are likely to rise to about 20%-25%, a far worse outcome than anticipated, Macquarie estimated.
Other Asian markets plunged on the day, with MSCI Asia ex Japan down 1%, as investors fled to the safety of bonds, gold and the yen as the unexpectedly steep tariffs threatened to upend trade and supply chains. [MKTS/GLOB]
"There were some expectations that India would have some concessions. But the silver lining is that tariffs (for India) are lower than China, Taiwan, Vietnam and several other ASEAN countries," said Ambareesh Baliga, an independent market analyst.
That could make some Indian exports relatively more competitive.
The other silver lining is that pharmaceutical products, among a few others, have been exempted, although analysts and investors await more clarity. For now, this could benefit Indian pharma companies, which count the U.S. as a key market.
On the flip side, IT companies, which also rely heavily on the U.S., could suffer as clients lower spending with the tariffs expected to drive up domestic inflation.
(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Savio D'Souza)