The Indian stock market is bracing for a potentially volatile session following a series of overnight developments, most notably the increased US tariffs on Indian goods. Here's a breakdown of eight key factors influencing market sentiment:

1. Gift Nifty Signals a Weak Start:

The Gift Nifty, which tracks Indian equities from GIFT City, plunged over 200 points after the announcement of increased US tariffs. This decline signals a likely gap-down opening for the Nifty 50 and Sensex. As of this morning, the Gift Nifty was trading around the 24,594 level, a discount of nearly 40 points from the Nifty futures' previous close, further indicating a negative start. GIFT Nifty is considered a key indicator of how international players view Indian stocks, so a sharp drop is a warning sign.

2. US Tariffs on India Increased:

President Trump has imposed an additional 25% tariff on imports from India in response to New Delhi's continued purchase of Russian oil. This move effectively doubles the duties on many Indian goods to 50%, placing India among the highest-tariffed US trade partners. The new tariff structure will come into effect on August 27, 2025, giving a 21-day grace period.

3. Impact on Key Sectors:

Export-oriented sectors such as textiles, automobiles, engineering goods, pharmaceuticals, and auto components are expected to bear the brunt of the tariffs. Specifically, sectors like textiles, marine products, and leather, which are often led by MSMEs, are anticipated to be hit hardest. Conversely, domestically driven sectors, including finance, telecom, healthcare, power, and real estate, are expected to absorb the shock with limited disruption.

4. Market Analyst Expectations:

Market analysts anticipate a knee-jerk reaction with markets potentially falling by 1-2%. HDFC Securities MD & CEO, Dhiraj Relli, estimates that if the tariffs remain in place for a full year, India's GDP could take a 30-40 basis point hit. Emkay Global Financial Services Ltd's Head of Research and Strategist, Seshadri Sen, advises investors to buy the dip if market correction exceeds 5%, given the limited direct earnings impact.

5. Government Response:

The Indian government has strongly objected to the US tariffs, calling them "unfair, unjustified, and unreasonable". The Ministry of External Affairs (MEA) has stated that India will take all necessary measures to safeguard its national interests and economic security.

6. Apple's US Investment:

Amidst the trade tensions, Apple has announced an increase in its US investment to $600 billion, up from a previous pledge of $500 billion. This move follows criticism regarding Apple's expansion in India. While the company's operations are not expected to be significantly impacted by the tariffs, this investment signals a deeper push into US manufacturing. Apple's share price jumped 5.1% following the announcement.

7. Asian Market Mixed Cues:

Asian markets are trading mixed, providing little directional guidance for the Indian market. Japan's Nikkei 225 is up 0.66%, while the Topix index gained 0.19%. South Korea's Kospi rallied 0.53%, while the Kosdaq was flat. Hong Kong's Hang Seng index futures indicated a weaker opening.

8. Wall Street Gains:

The US stock market ended higher, led by gains in the Nasdaq. The Dow Jones Industrial Average gained 0.18%, the S&P 500 rallied 0.73%, and the Nasdaq Composite closed 1.21% higher. Tech giants fueled these gains, with Apple shares surging 5.5%.

Overall, the Indian stock market faces a challenging day, primarily influenced by the newly imposed US tariffs. While some sectors may experience a significant impact, others are expected to remain relatively resilient. Investors are advised to stay informed and consider a cautious approach amid the ongoing uncertainty.