Textile, IT, auto, pharma stocks trade lower as US announces 25 per cent tariff plus penalty on India

New Delhi: Textile, IT, auto and pharma stocks were trading lower on Thursday after US President Donald Trump announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment.

Among textile-related stocks, Welspun Living tanked 5.27 per cent, Vardhman Textiles declined 3.27 per cent, Arvind Ltd fell by 3.16 per cent and Alok Industries dropped 2.82 per cent on the BSE.

From the IT pack, shares of Hexaware Technologies quoted 1.92 per cent down, Wipro traded 1.44 per cent lower, Infosys dropped 1.34 per cent, Tata Consultancy Services dipped 1.19 per cent, HCL Technologies (1.06 per cent) and Tech Mahindra (0.88 per cent).

Tracking weak trend in these stocks, the BSE IT index declined 1.29 per cent to 34,577.71.

Among pharma stocks, Jubilant Pharmova dropped 3.15 per cent, Ipca Lab slipped 3.28 per cent, Lupin (2.63 per cent), RPG Life Sciences (2.56 per cent), Dr Reddys Lab (1.55 per cent), Cipla (1.43 per cent) and Sun Pharma (0.81 per cent).

Shares of Maruti Suzuki India, Bajaj Auto, Ashok Leyland, Tata Motors, Mahindra & Mahindra and TVS Motor Company were also quoting lower.

The BSE auto index dipped 0.72 per cent to 52,708.33.

In the equity market, the 30-share BSE Sensex traded 574.64 points down at 80,906.60, and the 50-share NSE Nifty tumbled 173.50 points to 24,678.85.

The announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the US, which has, in recent days, got favourable trade deals with major partners like Japan, the UK and the European Union.

The penalty was announced as India has made large purchases of oil and military equipment from Russia. India is the first country to face a penalty for Russian imports.

Utsav Verma, Head of Research, Institutional Equities at Choice Broking, said investors will reassess their strategies with a mix of caution and optimism.

Sectors like textiles, pharmaceuticals, and automotive components are likely to be the most impacted and may see reduced investor interest in the short-term.

However, recent progress in trade negotiations suggests a constructive path forward, and "we believe that the trade deal will eventually follow, provided both nations show the necessary political will", he said, adding that many investors expect the tariff rate to eventually settle around 15 per cent.

"While a 25 per cent tariff imposed by the US on Indian exports certainly disrupts vital sectors and presents immediate challenges for India's economy, it is improbable that it will significantly alter the country's long-term growth path.

"India's growth narrative is supported by solid fundamentals such as a growing domestic market, vibrant entrepreneurial spirit, and increasing international partnerships," Rajesh Palviya, SVP - Research, Axis Securities, said.