Dalal Street on Edge as New US Tariff Threats Rattle Investors

A sense of caution prevailed on Dalal Street today as renewed tariff threats from the United States interrupted a recent market rally, pushing indices into the red.

Indian benchmark indices, which opened on a cautious note, succumbed to selling pressure throughout the day. At the closing bell on Wednesday, July 9, 2025, the 30-share BSE Sensex settled at 83,536.08, down 176.43 points (0.21%). The 50-share NSE Nifty 50 followed suit, declining by 46.40 points (0.18%) to close at 25,476.10.

The market’s slight downturn was a direct reaction to aggressive trade rhetoric from the United States, fostering a risk-off sentiment among traders already on edge ahead of the first-quarter corporate earnings season.

US Tariff Threats Rattle Key Sectors

The primary catalyst for the market downturn was the announcement of a new trade offensive by US President Donald Trump. The White House has threatened to impose steep new tariffs that could directly impact major Indian export sectors.

The most significant threat is a potential 200% tariff on pharmaceutical imports. This is particularly concerning as the US is the largest market for Indian pharma firms, accounting for over a third of the nation’s pharmaceutical exports.

Adding to the concerns, Trump also announced a 50% tariff on copper imports, which immediately put pressure on metal stocks. Reports also suggested a potential 10% tariff on all imports from BRICS nations, a bloc that includes India. This broad-based threat has created significant uncertainty over the future of India-US trade relations, despite ongoing talks for a potential trade deal.

Sectoral Breakdown: Metals and IT Under Pressure

The market’s reaction was most visible in the sectoral indices. The Nifty Metal index was one of the hardest-hit, with investors selling shares of companies that could be impacted by the copper tariffs. Shares of Hindustan Copper and Vedanta saw significant declines during the day’s trade.

The Nifty IT index also faced selling pressure. Indian IT companies derive a substantial portion of their revenue from the US, and any slowdown or negative sentiment in the American economy due to trade wars can have a ripple effect on their business outlook.

Interestingly, while the pharma sector was the main target of the tariff threat, its reaction was more mixed. Some stocks declined, while others showed resilience, possibly as investors await more concrete details to emerge from the initial threats.

The broader market sentiment was weak, with oil & gas and realty stocks also ending the day with losses. The caution was palpable, as the number of declining stocks on the BSE outnumbered the advancers.

Key Factors for Investors to Monitor

For retail investors, the current market environment calls for caution and careful monitoring. Here are a few key factors to watch:

• US-India Trade Negotiations: Any official statements or developments regarding the proposed tariffs will be the biggest market mover. A de-escalation could trigger a sharp relief rally, while confirmation could lead to further declines.
• Q1 Earnings Season: The corporate earnings season kicks off this week, with IT major TCS set to announce its results. Strong earnings could provide some support to the market, but weak guidance could amplify the negative sentiment.
• Global Cues: Keep an eye on how other Asian and global markets are reacting to US trade policy. A coordinated global downturn would be a bearish signal.
• Nifty Technical Levels: The Nifty 50 has previously found support around the 25,400 level. A decisive break below this could open the door for further downside. On the upside, the 25,600 level will act as a key resistance.

While a “Bharat Bandh” (nationwide strike) called by trade unions on July 9 passed without impacting market operations, the tariff situation remains the dominant theme. Investors are advised to stay informed and avoid making hasty decisions based on headlines alone.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Please conduct your own research before making any investment decisions.