Market rises despite 50% tariffs, analysts attribute it to reduced uncertainty and hopes for US-Russia trade talks

The Indian market is rising despite 50% tariffs and dire predictions due to reduced uncertainty from Trump's tariff resolution and hopes for US-Russia trade talks easing oil purchases for India. However, the assumption that a US-Russia agreement will automatically eliminate the extra 25% tariff is uncertain. SBI's earnings were good with strong loan and deposit growth, making it a primary beneficiary of the Indian government's focus on infrastructure, and it is at a favourable valuation.

Despite the imposition of a 50% tariff on Indian goods by the United States, the Indian market has shown resilience, rising against the backdrop of reduced uncertainty following the resolution of Trump's tariff threat. The Indian market's buoyancy is attributed to the anticipation of easing oil purchases and potential US-Russia trade talks. However, the assumption that a US-Russia agreement will automatically eliminate the extra 25% tariff remains uncertain.

SBI's earnings have been robust, with strong loan and deposit growth, making it a primary beneficiary of the Indian government's focus on infrastructure. The bank's favorable valuation further supports its market position.

The tariffs, which will come into effect on August 27, have been met with criticism from India's foreign ministry, which described the move as "unfair, unjustified, and unreasonable." The tariffs are expected to significantly impact key Indian export sectors such as textiles, gems and jewelry, auto parts, and seafood, potentially cutting US-bound exports by 40-50% [1].

India's response to the tariffs has been cautious, with the country's external affairs ministry stating that it will take all necessary steps to protect its national interests. The Federation of Indian Exporters Organisations has warned that the tariffs could severely disrupt Indian exports, with nearly 55% of shipments to the US affected [2].

The Indian market's resilience is further supported by the anticipation of a potential realignment in alliances, as Prime Minister Narendra Modi prepares for his first visit to China in over seven years. The visit suggests a potential shift in India's strategic focus away from the US.

Despite the challenges posed by the tariffs, the Indian market remains optimistic, with investors and financial professionals cautiously optimistic about the potential for trade negotiations to ease the situation. The market's buoyancy is a testament to India's economic resilience and its ability to navigate complex geopolitical challenges.

References:
[1] https://www.bbc.com/news/articles/c1dxr1g4y7yo
[2] https://www.reuters.com/world/india/trump-imposes-extra-25-tariff-indian-goods-ties-hit-new-low-2025-08-06/