5 Reasons Why Indian Stock Market Stayed Resilient Despite Trump's Tariffs On India

The selling momentum grew in trade on Friday, August 8, dragging the Indian benchmark bourses down by 1 per cent each.

The Nifty50 dropped down by 233 points, or 0.95 per cent, ending at 24,363.30 and Sensex fell down by 765 points, or 0.95 per cent, to settle at 79,857.79 level.

The Smallcap index fell by 1.03 per cent, and the BSE Midcap index declined by 1.56 per cent.

However, market analysts are of the view that the Indian market bourses were steady post Trump's first tranche of tariff. However, they expected a stock market bloodbath after the additional tariffs were placed upon Indian imports, but that didn't occur.

Meanwhile, the Indian stock market remained sluggish over the course of the last six weeks. Responding to the tariff immediately, the stock market also witnessed foreign investors selling heavily, and several reports expected fund outflow of Rs 25,000 to Rs 27,000 during the week-long pressure.

On the other hand, Sensex shrugged off the blow with a steep single-day fall of roughly 765 points but managed to avoid a full-scale breakdown. So, what aided Indian Stock Market Indices to weather a possible market crash?

Less affordable for US-based consumers and business entities

The total levy of 50 per cent on Indian imports poses a hurdle for Americans businesses given it could lead to supply chain alterations, and even loss of competitiveness for the US firms, which depend on Indian goods.

Also Read: 'Collective Action is Key': Jefferies' Chris Wood To US Tariffs

More political statement than sound economics

The hike in tariffs is widely seen as a politically charged move rather than a solely economic decision. Trump has already made his reasoning behind this move public saying India's energy purchases are fueling the Russian war machine in Ukraine.

Indian Leadership Responds Sharply After Trump's Tariff Whammy

Instead of reacting, India responded calling out the tariffs unfair and not justified, while calling out the double-faced sword of being in bed with the US, given the latter prompted the south Asian nation to buy Russian crude oil to ensure no spike in global oil prices earlier after imposing sanctions on Iranian oil.

DIIs Cushion Blow To BSE, NSE

The solid aid in terms of support from domestic institutional investors (DIIs) has cushioned the markets. Consistent buying by these investors shows that they believe in India’s economic fundamentals and see such tariff-related headlines as short-term noise rather than a structural risk.