Indian Rupee Holds Strong Despite Trump’s 50% Tariff Hike on Indian Exports

Despite the tariff rates being increased on Indian exporters a day earlier, the Indian rupee stood fearlessly and strongly against the US dollar as soon as the stock market opened on Thursday. Even though the stock market saw a decline and the Sensex fell by 454 points and the Nifty went below 24450, on the other hand, the rupee traded in a limited range in the early trade and rose by 5 paise to reach 87.67 per dollar. Foreign exchange traders say that this aggressive move by President Trump will affect selected Indian exports. This additional tariff will be implemented on India in 21 days.

Indian Rupee Gains Despite Tariff Hike by Trump

The rupee opened at 87.69 against the US dollar in the interbank foreign exchange market today. After this, it reached the level of 87.67, which is 5 paise more than the previous closing price. The rupee closed at 87.72 against the US dollar on Wednesday, rising by 16 paise.

Foreign institutional investors sell off

Meanwhile, the price of Brent crude jumped 0.99% to $67.55 per barrel in futures trading. The dollar index, which shows the position of the US dollar against six major currencies, rose 0.04 percent to 98.21. According to stock market data, foreign institutional investors (FIIs) sold shares worth Rs 4,999.10 crore on a net basis on Wednesday.

Trump Imposes 50% Tariff on Indian Goods Over Russian Oil Imports

Let us tell you that US President Donald Trump has increased the tariff on India by a huge 25 percent to 50 percent. The Trump administration announced this on Wednesday. This tariff has been imposed due to India buying cheap oil from Russia. Under this, the 25 percent duty announced on July 30 will be effective from August 7, while the new additional duty will come into effect 21 days later i.e. from August 27. After this order, the total duty on Indian goods will be 50% except for some exempted goods.

Stock Market Reacts: Nifty Below 24450, Sensex Down 454 Points

At around 9:30 am, NIFTY 50 was down by just -0.23 percent. Whereas, NIFTY NEXT 50 was up by 0.12 percent. Bank Nifty was trading down by 0.27 percent. However, Nifty Financial Services was down by 0.30 percent. Nifty Midcap index was up by 0.12 percent. Whereas, the Small Cap index was flat.

Nifty Media and Pharma Lead Gainers

Nifty Media was at the top of the sectoral index, with a jump of 1.41 percent. Nifty Pharma index also jumped by 0.52 percent. Nifty IT and FMCG index were also trading in the green. PSU Bank was up by 0.13 and Realty index was up by 0.18 percent. Health Care was also green. There was pressure on the Oil and Gas index.

Top Gainers and Losers on NSE

Nifty Top Gainers list included shares of Hero Motors, Trade, Wipro, ITC and Nestle India. While, the top losers included Tata Motors, Eternal, Kotak Bank, Adani Ports and Adani Enterprises. These fell by 0.76 to 1.49 percent.

Trading like normal days on NSE

Today, the trend on NSE is similar to normal days. A total of 2584 stocks are trading and 1094 of them are on the rise. Whereas, 1423 are down and 67 are unchanged. Meanwhile, 24 stocks are at 52-week high and 58 are at low. 27 stocks have an upper circuit and 31 have a lower circuit.

Impact of Trump's action on the market

While, Prashant Tapase, Senior Vice President (Research) from Mehta Equities, says that due to Trump's heavy tariff on goods imported from India and heavy selling by institutional investors, fall in the value of rupee and deteriorating condition of Nifty, bears are likely to dominate Dalal Street.

He says that President Trump's rhetoric and his actions will have an impact on the stock market in the near future. However, till now, despite Trump's rhetoric and action, India's reaction has been completely calm.

Q1. Why did President Trump increase tariffs on Indian exports?

A1. President Trump raised tariffs on Indian goods to 50% in response to India importing cheap oil from Russia. The new duties take effect on August 27.

Q2. How did the Indian rupee react to the increased US tariffs?

A2. The Indian rupee showed resilience and rose by 5 paise to 87.67 per USD, despite the sharp increase in tariffs and a drop in stock market indices.

Q3. Which sectors and stocks gained despite market pressure?

A3. Nifty Media and Pharma sectors were among the top gainers, while Hero Motors, Wipro, and Nestle India led the list of top-performing stocks on NSE.

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