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Rupee weakens to over four-month low on importers' US dollar demand
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Business Standard
11 minutes ago
- Business Standard
Goldman Sachs, Bernstein, Nomura: Brokerages decode Trump India tariffs
Donald Trump's 25 per cent tariff on Indian goods triggered a sharp fall in the markets in with the S&P BSE Sensex slipping nearly 800-points in intraday deals before recovering partially. While brokerages see this as a knee-jerk reaction to the developments, they are hopeful that the final tariff will be lower – in the 15 – 20 per cent range as both countries are still trying to eke out a feasible solution. Meanwhile, here's how leading brokerages have interpreted the developments: Goldman Sachs While the surprise 25 per cent tariff announcement will likely impact earnings, if enforced, we think the incremental earnings drag would be relatively moderate. Only 2 per cent of MSCI India total revenues are derived from goods exporting sectors. As such, the direct tariff impact is relatively small, based on our baseline pass-through assumptions. Every 5 percentage point (pp) increase in US tariff rates could cause an 80 basis point (bp) incremental hit to MSCI India earnings per share (EPS) from direct and indirect channels. As such, we estimate about 2 per cent incremental hit to EPS if the new tariffs are enforced. While we are not making any changes to our EPS growth forecasts (currently at 12 per cent/14 per cent for CY25/26). Indian equities have significantly lagged broader emerging market (EM) equities year-to-date (by about 15pp); the underperformance is likely to extend in the near-term. Nomura The announced higher reciprocal tariff rate of 25 per cent, however, may be temporary, and might settle down lower. The US trade delegation is set to visit India at end-August as part of this process. Hence, the elevated tariffs announced by the US are unlikely to be permanent, in our view, although the best-case outcome would be tariffs in the 15-20 per cent range. Over the medium-term, we would still expect India to remain a beneficiary of the China plus one strategy. Higher tariffs from the US could add downside risks to the RBI's FY26 GDP growth forecast of 6.5 per cent. Already, high frequency data point to a sluggish Q2 , with subdued urban consumption, weak private capex and moderating credit growth. Higher tariffs and pressure to curb Russian energy will further drag down growth due to weaker net exports. We maintain that the Reserve Bank of India's (RBI's) rate cutting cycle is not over, despite the change in its stance to neutral. We expect 25bp cuts each in October and December to a terminal repo rate of 5.00 per cent by end-2025, with risks skewed towards further cuts. Bernstein The best news, for now, is the fact that services remains outside this ambit, a place where serious macro dents can happen. UK, EU and Japan have forged a trade deal. Indonesia enjoys 19 per cent, Japan 15 per cent while Vietnam is at 20 per cent. India is no longer attractively placed in the pecking order. The worse could well be coming, as if China somehow settles at 34 per cent, which was the original plan, this would get the India-China differential really low, simply not high enough for India to have a meaningful China+1 impact. Angel One Export-oriented stocks can underperform in the near-term. Investor sentiment till trade talks turn positive from here is expected to remain cautious. FPIs may adopt a wait-and-watch stance till further clarity comes in or their stance may lead towards a sector rotation approach. Investors (domestic & foreign) are expected to shift their focus towards domestic growth, consumption, infrastructure and financial companies that rely less on exports. PL Capital Tariff announcement is much beyond trade and has far bigger geopolitical implications on the ongoing bilateral relations between India and US since Operation Sindoor. The roots of this aggression lie in Indian denial of US role in ceasefire with Pakistan; sustained buying of Russian crude; continuous status of Russia as a key defence supplier; and growing strategic overtures of BRICS and attempts at forging a RIC (Russia, India, China) block which might disturb US geopolitical interests in SE Asia. Probability of shifting of defence procurement away from USA post Operation Sindoor, might have led to sudden imposition of tariffs and penalty. We believe this attempt by US is a bullying tactic, which has also been used against some other countries, including Canada. We expect increase in uncertainty and market volatility in the near-term. Companies that have higher US exports might see increased volatility. Domestic consumption, hospitals, select consumer, Infra, capital Goods, AMC and private banks will act as a defensive hedge during these volatile times. Barclays We do not see this 25 per cent tariff threat impacting GDP growth meaningfully, pegging the likely impact at around 30bp. We expect near-term pressure to be maintained. The rupee looks oversold in the short term. Clearly, USD-INR has bounced more than anticipated, but we think the February high of just under 88.0 remains a strong resistance level. The INR also remains cheap in both NEER and REER terms, which could mean more of an inclination from the RBI to intervene to cap weakness.
Economic Times
11 minutes ago
- Economic Times
M&B Engineering IPO sails through on Day 2: Check GMP, price band, and other key details
The price band for the IPO is set at Rs 366–385 per share. At the upper end, M&B Engineering's market capitalisation is estimated at approximately Rs 2,200 crore. M&B Engineering's IPO saw strong demand, fully subscribed by Day 2 with an overall subscription of 110%. Retail investors showed significant interest, subscribing 4.18 times their quota. The IPO price is set at Rs 366–385 per share, with proceeds aimed at capital expenditure and debt repayment. Brokerages are positive, citing the company's strong fundamentals and growth potential. Tired of too many ads? Remove Ads Use of Proceeds Tired of too many ads? Remove Ads Company Details Should You Subscribe? The initial public offering (IPO) of M&B Engineering was fully subscribed by Day 2 of bidding, with an overall subscription of 110% as of 11:15 am on IPO received bids for 1.08 crore shares against 97.98 lakh shares on offer. Retail investors subscribed 4.18 times their quota, while non-institutional investors (NIIs) subscribed 1.22 times. Qualified institutional buyers (QIBs) were yet to price band for the IPO is set at Rs 366–385 per share. At the upper end, the company's market capitalisation is estimated at approximately Rs 2,200 the grey market, M&B Engineering shares were quoting at a premium of Rs 54–55, implying a listing gain of about 16% over the issue net proceeds will be utilised for capital expenditure, debt repayment, and technology upgrades at the company's manufacturing units in Sanand and Cheyyar.M&B Engineering is one of the largest players in the pre-engineered buildings (PEB) and self-supported steel roofing segments, with over 9,500 completed projects and exports to 22 client portfolio includes the Adani Group, Tata Advanced Systems, and Alembic Pharma . As of June 30, its order book stood at over ₹840 crore. The company provides end-to-end project solutions including design, fabrication, and FY25, the company reported revenue of Rs 988 crore and a net profit of Rs 77 crore, with an EPS of Rs 13.5. The IPO is priced at a P/E of 28.5x based on FY25 are positive on the company's fundamentals but note that the issue appears fully priced. Anand Rathi has rated the IPO as 'Subscribe for Long Term,' citing M&B's integrated manufacturing setup, economies of scale, and export momentum, particularly in the U.S. Capital and DAM Capital Advisors are the book-running lead IPO includes a fresh issue of equity shares worth Rs 275 crore and an offer for sale (OFS) of Rs 375 crore by the promoters.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
India Today
11 minutes ago
- India Today
Trump's 25% tariffs: Which sectors are at most risk?
Despite multiple rounds of talks, and Trump calling India a 'friend', the label of 'tariff king' seems to have stuck harder and several Indian industries could be left footing the seems to be preparing for a tough few weeks after US President Donald Trump announced a 25% tariff on Indian exports starting August additional penalty was also announced for India's continued oil purchases from Russia, which has added more uncertainty for The US has been calling for a fairer deal, often criticising India for high tariffs and trade restrictions. In a post on the Truth Social platform, Trump said India has 'the most strenuous and obnoxious non-monetary Trade Barriers of any Country.' The tariff rate, he said, is also among the highest in the and the US have been in trade talks for months. Despite India being one of the first countries to respond to the US outreach, the two sides failed to reach a deal. India expected better treatment, especially after Prime Minister Narendra Modi's high-profile US visit earlier this the decision to slap tariffs similar to or higher than those imposed on other Asian nations like Vietnam (20%) and Indonesia (19%) has come as a to Bloomberg, calculations show that nearly 10% of India's total exports to the US could be impacted between July and September if the tariffs stay at 25%. The India-US two-way trade was worth about $129.2 billion in Bathini, Director – Equity Strategy at WealthMills Securities, said the final draft of the US tariff move will decide which sectors get hit the hardest. But as of now, the sectors to watch are 'gems and jewellery, aqua exports, and some segments of auto components.'GEMS AND JEWELLERY SECTOR UNDER STRESSOne of the biggest industries facing immediate pressure is the gems and jewellery sector. The US is a key market, accounting for over Rs 83,000 crore (approx $10 billion) of India's jewellery exports. A 25% tariff could inflate costs, delay shipments, and disrupt Gem and Jewellery Export Promotion Council said the sector is staring at major a statement released late Wednesday, the council said the tariff move could 'threaten thousands of livelihoods' and 'disrupt critical supply chains.' The group added that costs would rise across the value chain, from workers to manufacturers, if the tariffs are not rolled back COMPANIES MAY LOSE COMPETITIVE EDGEIndia is the largest supplier of generic medicines to the US, exporting non-patented drugs worth roughly Rs 66,800 crore ($8 billion) annually. Companies like Sun Pharmaceutical Industries, Cipla, and Dr. Reddy's Laboratories earn nearly 30% of their revenue from the US Mariwala, Executive Chairman and MD of OmniActive Health Technologies, said that India isn't just a key supplier of generics to the US; we are a part of the backbone of affordable global healthcare."These duties may interrupt the smooth trade flow, inflate US drug costs, stall treatments, and put even greater pressure on American healthcare budgets. Back home, the profits for Indian pharmaceutical firms may decline, and R&D may stagnate, slowing down innovation and stalling new drug clearances," he from IQVIA, mentioned in a Bloomberg report, shows that four out of ten prescriptions filled in the US in 2022 were sourced from Indian companies. Indian generics helped save nearly Rs 18.3 lakh crore ($220 billion) in US healthcare costs in 2022 alone. A 25% tariff could damage this cost advantage and make Indian pharma less AND APPAREL INDUSTRY HIT BY DUTY GAPThe textile and apparel industry is another major exporter to the US, supplying everything from home linens to footwear. Indian suppliers work with brands such as Walmart, Gap, and Confederation of Indian Textile Industry said in a statement that the higher tariffs could create a 'stiff challenge' for the industry. It added that India will lose the competitive edge it had been hoping for over countries like Vietnam, which now face lower Textiles, in its recent earnings call, flagged slow business from the US due to tariff worries. Companies like Welspun Living, Indo Count, and Arvind Fashions may also see a decline in orders if prices rise due to the new EXPORT PLANS MAY SUFFERIndia recently overtook China as the top source of smartphones sold in the US, thanks to Apple's decision to assemble more iPhones in India. However, this success could be Rana and Andrew Girard, analysts at Bloomberg Intelligence, said in a note that Apple's shift to India might be 'set back' if the full 25% tariff is applied. 'A 25% surcharge would most likely force Apple to revise this plan,' they wrote, noting that India's electronics exports could face new IMPORTS FROM RUSSIA MAY BRING MORE PENALTIESAlongside the tariffs, Trump also warned of an additional penalty due to India's energy imports from Russia. India now gets around 37% of its oil from Russia at discounted rates, which has helped maintain strong profit margins for like Reliance Industries, Indian Oil Corp, Bharat Petroleum, and Hindustan Petroleum may suffer if these imports are restricted or taxed further. Reliance, for example, had signed a deal to buy up to 500,000 barrels of Russian oil per day this year, making it India's largest buyer of Russian access to cheap Russian oil is limited, Indian refiners may be forced to buy from costlier suppliers, which would lower their profit margins and increase fuel prices at MAY ADJUST OVER TIMEDespite the near-term pain, some experts believe the long-term impact could be Palviya, SVP – Research at Axis Securities, said the tariffs will hurt in the short run, but may not change India's growth story. 'It is improbable that it will significantly alter the country's long-term growth path,' he added that India's domestic market, entrepreneurial drive, and global partnerships remain strong. He believes both countries will eventually realise the need for a more balanced trade relationship, which could lead to softer tariff rules in the Trump's return, the change in trade tone has been clear. It's a wake-up call—India must double down on securing Free Trade Agreements with other major economies," said Mariwala."These aren't just about market access; they're about securing India's place in the world economy and advancing the vision of Viksit Bharat," he added.- EndsMust Watch
