Markets fall after Trump's additional tariff threat on Russian crude oil

Business Standard

13 hours ago

Indian equity benchmarks declined on Tuesday after US President Donald Trump renewed his threat to impose additional tariffs on India over its oil purchases from Russia. General caution ahead of the Reserve Bank of India's (RBI's) monetary policy decision on Wednesday also weighed on sentiment.
The Sensex ended the session at 80,710, down 309 points or 0.4 per cent. The Nifty closed at 24,650, a decline of 73 points or 0.3 per cent. The total market capitalisation of BSE-listed firms fell by ₹83,000 crore to end at ₹448 trillion.
Trump on Monday said he would substantially raise tariffs on India to penalise it for importing Russian oil, although he did not specify by how much. His latest announcement follows a 25 per cent tariff on Indian imports announced last week — among the steepest for a major economy.
In a social media post, the US President said India was not only buying large quantities of Russian oil but also selling it on the open market for significant profits, disregarding the humanitarian toll of the war in Ukraine. He had earlier given an August 8 deadline for Russia to reach a truce and threatened secondary sanctions on countries continuing to purchase Russian energy. Ukraine's allies argue such purchases support the Russian economy and ease pressure on the government to end its military campaign, now entering its fourth year.
India's external affairs ministry responded by stating that the country began purchasing Russian oil only after traditional suppliers diverted shipments to Europe following the onset of the war. The ministry said the US had, at the time, encouraged such imports. It called the targeting 'unjustified and unreasonable' and asserted that India would take all necessary steps to safeguard its national interests and economic security. Relations between the two countries have been strained by the tariff imposition following months of negotiations. India has also taken exception to Trump's claim that he helped resolve its conflict with Pakistan earlier this year.
Looking ahead, trade negotiations with the US and the outcome of the RBI policy meeting will influence the near-term market trajectory.
'Investors are now awaiting the upcoming RBI policy decision, where the market has marginal expectations of a rate cut in the near term. Currently, the preferences of investors are for domestic consumption-driven stocks and sectors holding limited volatility to external factors,' said Vinod Nair, head of research at Geojit Financial Services.
Market breadth was weak, with 2,371 stocks declining and 1,672 advancing. ICICI Bank, down 1.3 per cent, was the biggest contributor to the Sensex's fall, followed by Reliance Industries, which slipped 1.4 per cent.
'The near-term downtrend of Nifty remains intact, and the market is expected to slide towards the 24,500–24,400 levels in the next few sessions. However, tomorrow's RBI mid-quarter policy outcome is expected to provide clear direction. Immediate resistance is placed at the 24,800 level,' said Nagaraj Shetti, senior technical research analyst at HDFC Securities.