Indian Stock Markets May Open Lower Due to US Tariff Concerns

India's stock benchmarks may open lower due to concerns over US tariffs. HDFC Bank Limited is one of the largest Indian banking groups, with a network of 5,000 branches in the country. The group generates income through retail, corporate, and market banking, with a focus on current deposits and credits.

Indian stock benchmarks are expected to open lower on July 2, 2025, due to escalating trade tensions with the US, particularly the new 25% tariff on Indian imports, which brings the cumulative levies to 50% [1]. This development has led to a rare underperformance of Indian equities compared to their emerging-market peers. The MSCI India Index has lagged the MSCI Emerging Markets gauge for four consecutive months and trails by more than 15 percentage points year-to-date, the worst relative performance in over two decades [1].

The overhang of tariff risks, along with a slowdown in economic growth and downgrades in corporate earnings, has resulted in foreign outflows from India’s $5.3 trillion market. Rajeev De Mello, a portfolio manager at Gama Asset Management SA, commented, “This trade war with the US is critical, so until it is resolved, I don’t expect a catchup” [1].

HDFC Bank Limited, one of India's largest private sector banks, is likely to face pressure due to these tariffs. The bank operates a network of 5,485 branches and 14,533 ATMs across 2,866 cities and towns, generating income through retail, corporate, and market banking [3]. The new tariffs could shave 0.6 to 0.8 percentage points off India’s annual growth, according to Citigroup Inc. estimates, further denting prospects for companies after they delivered weaker earnings in the latest quarter [1].

In the first quarter of 2025, 1832 Asset Management L.P. reduced its stake in HDFC Bank Limited by 6.8%, selling 87,474 shares, and now holds 1,198,179 shares worth approximately $79.6 million [2]. The bank reported earnings of $0.74 per share for the quarter, missing the consensus estimate of $0.75, although revenues exceeded expectations at $5.1 billion [2]. Despite the recent earnings miss, HDFC Bank continues to maintain a Strong Buy rating among analysts [2].

The Reserve Bank of India Governor has indicated that the impact of tariffs on India could be minimal, while hope remains for a favorable outcome in trade talks between New Delhi and Washington [1]. However, the market remains cautious, with foreign investors extending their selling of local equities on a net basis into a second month in August [1].

References:
[1] https://m.economictimes.com/markets/stocks/news/indian-stocks-struggles-to-shake-off-pessimism-ahead-of-tariffs/articleshow/123514287.cms
[2] https://www.marketbeat.com/instant-alerts/filing-1832-asset-management-lp-sells-87474-shares-of-hdfc-bank-limited-hdb-2025-08-23/
[3] https://www.icicidirect.com/stocks/hdfc-bank-ltd-share-price