Trump's secondary sanctions rattle markets

The major US indices all closed higher, yesterday, 6^th August, led by the tech-heavy Nasdaq’s 1.29% surge. Apple drove much of the rally, jumping 5.1% on reports that the company will announce a $100 billion U.S. investment expansion at a White House event today. The tech giant’s gains also reflected optimism about its insulation from new tariffs.

The S&P 500 advanced 0.73%, supported by strong quarterly earnings and growing expectations for a Federal Reserve rate cut in September.

Donald Trump announced an additional 25% tariff on India as a “penalty” for its continued importation of Russian crude oil, while pledging similar measures against other nations that buy Russian energy and thereby fund Moscow’s cash-strapped war effort in Ukraine.

Trump’s latest tariff offensive brings total duties on Indian imports into the United States to 50% —20% higher than the tariff on China and 21 percentage points above that imposed on Pakistan.

The new tariff applies to goods entered into the U.S. 21 days from Aug 6, 2025 (except shipments already in transit before the deadline, which must arrive before Sept 17, 2025.

The U.S. trade team is scheduled to visit India on August 25 for the sixth round of talks on the proposed bilateral trade agreement between the two countries.

Market participants will hope that these negotiations will lead to the resolution of the issue before the actual implementation of the duties.

The sudden imposition of 25% is higher than expected. This could hit Indian export-oriented sectors—especially IT services, textiles, engineering goods, pharma, and auto components—and may trigger retaliatory tariffs from India, risking a broader U.S.–India trade dispute.

It was yet another weak session yesterday for the Indian market, with the Nifty falling 75 points (0.31%) to close at 24574. The Reserve Bank of India’s Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.5% in its policy review yesterday. The central bank has maintained its GDP growth projection for FY26 at 6.5%, signalling confidence in India’s economic resilience despite persistent global headwinds.

The index has consistently found resistance near its 5-day DEMA (24662) over the past several sessions, continuing its downtrend. The Nifty is now on the verge of breaching the crucial support zone of 24473-24500. A break below this level would see the next support emerge near 24200, where the 200-day DEMA is positioned. On the upside, 24800 is expected to offer short-term resistance.

Indian markets are slated to open subdued on the back of additional tariffs imposed by the US.

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Source: HDFC Securities Prime Research