Indian shares advance on EU tariff relief
MUMBAI: Indian shares advanced on Monday, extending gains from the previous session, on easing global trade tensions and the Reserve Bank of India's record dividend transfer, which reaffirmed prospects of sustained fiscal consolidation.
The Nifty 50 closed 0.6% higher at 25,001.15, while the BSE Sensex traded 0.56% higher to close at 82,176.45.
US President Donald Trump backed off his threat to impose 50% tariffs on European Union (EU) imports, easing trade concerns, potentially hinting 'that the US may reduce its aggression in the trade war, which is a positive,' according to G Chokkalingam, founder and head of research at Equinomics Research and Advisory. The US and EU now have time until July 9 to work on a trade deal.
All 13 major sectors logged gains.
Metals jumped about 1%, as a weaker US dollar and Trump's reprieve boosted the appeal of commodities.
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US actions to hurt trade
ISLAMABAD: The government Tuesday said there is a possibility that Pakistan's trade will be adversely affected by US actions and will not allow it to maintain stable trade ties while larger economies face pressures. The Economic Survey 2024-25 Pakistan's export to USA is only 17 percent of its total exports to the world in value terms. In 2024, U.S. exports to Pakistan totaled US$ 2.14 billion, while imports stood at US$ 5.47 billion. Pakistan is also a major trading partner of the EU, China, and other Middle Eastern and far eastern countries. Therefore, there is a possibility that Pakistan's trade will be adversely affected by the US actions and will allow it to maintain stable trade ties while larger economies face pressures. Pakistan's lower reciprocal tariffs make it a more accessible market for the U.S. and strengthen the case for preferential treatment. Pakistan has $2.5bn surplus in trade with US: Aurangzeb Although Pakistan imposes a lower trade-weighted average tariff on import of US goods (7.3%) compared to US tariffs on Pakistan's exports (9.9%), the formula adopted by the US resulted in 30 percent additional tariffs on Pakistan. While countries like Cambodia (49%), Vietnam (46%), China (145% and above), and Bangladesh (37%) faced significantly higher reciprocal tariffs from the U.S., Pakistan's rate of 30 percent stands out, lower than several competitors and close to India's 27 percent. The comparatively open market profile in terms of trade-weighted average tariff strengthens Pakistan's case for preferential treatment or improved U.S. market access, positioning it as a cooperative and reasonably open trading partner. Pakistan is one of the largest importers of U.S. cotton, a vital input for its top export sector, textiles and apparel. In FY 2024, it imported over $ 700 million worth of raw cotton, the largest item in imports from US. This number is expected to increase further in the ongoing year. By sourcing high-quality cotton from the U.S. and exporting back value added finished goods, Pakistan built a mutually beneficial trade cycle. This model not only boosts industrial competitiveness but also strengthens long-term access to the U.S. market. The government is in consultations with the private sector to devise policies that will increase cotton imports from the U.S., solidify Pakistan's role as a reliable textile supplier, further anchoring bilateral trade. Pakistan has recently resolved the issues in the import of Soyabean and Beef products from the U.S., which will further enhance its trade with one of the largest markets in the world. Pakistan has the opportunity to gain market share in the U.S. for several products where high tariffs have been imposed on key competitors like China, Cambodia, and Vietnam, while Pakistan faces relatively moderate tariffs, higher than Egypt and Turkey but lower than most others. The best opportunities lie in products that the US imports in large volumes from these high-tariff countries, where Pakistan already has some export presence. Key categories include textiles and apparel, where Pakistan can expand in cotton trousers, knit shirts, and denim, capitalizing on its strong textile base. Beyond apparel, home textiles such as bed linen, towels, and curtains present strong potential, as Pakistan is already a major exporter and competitors like China and Vietnam face steeper tariffs. Similarly, leather gloves, sports goods, and footwear offer openings due to higher tariffs on Chinese and Vietnamese goods. With targeted improvements in quality, branding, and compliance, Pakistan can position itself as a reliable alternative supplier in these sectors. The Economic Survey further states that historically, export performance did not remain impressive. However, during July-April, FY 2025, Pakistan's export performance showed signs of recovery, reflecting a combination of improved global demand, competitive exchange rate stability, and targeted policy support. Thus, as per PBS, the total exports showed an increase of 6.4 percent, totaling $ 26.9 billion compared to US$ 25.3 billion during the corresponding period last year. The textile sector remained dominant, contributing 55 percent of total exports, with knitwear, bedwear, and readymade garments driving growth through higher volumes and better pricing. Non-traditional exports, such as IT services, pharmaceuticals, and engineering goods, showed promising expansion, reflecting early success in diversification efforts. Government initiatives, including duty drawback schemes, energy subsidies, and improved market access, played a vital role in this positive trend. The government is implementing targeted measures to expand market reach and address supply-side constraints, thereby enhancing export stability, while reducing reliance on remittances and debt financing. Pakistan's import performance during July-April FY 2025 reflects a blend of economic recovery, exchange rate stability, and industrial expansion, with total imports rising 7.6 percent to US$ 48.3 billion, up from US$ 44.9 billion in the same period last year. After years of policy-driven import suppression, the recent increase signals revived domestic demand, particularly for capital goods and industrial inputs. Government and SBP policies promoting currency stability have also enhanced pricing predictability for essenti al imports, encouraging investment in productive sectors. The composition of imports indicates a shift toward investment-led growth, with a greater share of imports directed toward machinery, industrial materials, and agricultural inputs, laying the foundation for trade sustainability and economic resilience. Managing this rising import demand in line with long-term growth objectives will depend on continued regulatory stability and investment focused reforms. Machinery imports increased 14.4 percent to US$ 7.7 billion during July-April FY 2025 (US$ 6.8 billion last year), reinforcing Pakistan's industrial recovery and modernization efforts. Notably, Power Generating Machinery surged 65.4 percent, Construction & Mining Machinery by 57.2 percent, and Textile Machinery 61.7 percent, pointing to higher investments in energy, infrastructure, and export-oriented sectors. Agricultural Machinery increased 33.8 percent, reflecting growing mechanization in farming. Electrical Machinery, holding a 38.4 percent share of the group, rose 14.6 percent to US$ 3.0 billion. In contrast, telecom imports declined 5.8 percent to US$ 1.7 billion, driven by a 14.2 percent drop in mobile phone imports as local manufacturing expanded. This capital goods-driven growth underscores Pakistan's pivot toward productive investments, supporting export competitiveness and long-term resilience. With a 27.5 percent share during July-April FY 2025, the petroleum group remained the largest import category. However, imports declined 3.4 percent to US$ 13.3 billion (US$ 13.8 billion last year), aided by stable oil prices and currency stability. While crude oil value held steady at US$ 4.5 billion (US$ 4.6 billion last year), quantity rose 14.9 percent, indicating efficient procurement. Petroleum product imports fell 6.3 percent to US$ 5.0 billion (US$ 5.3 billion last year), reflecting demand management. LNG imports dropped 10.3 percent to US$ 2.9 billion (US$ 3.3 billion last year), while LPG imports rose 34.7 percent, albeit from a low base, to US$ 885.2 million. These shifts underscore strategic energy sources amid evolving domestic energy needs. Strengthening local refining capacity and diversifying energy inputs remain key to reducing external vulnerabilities. During July-April FY 2025, textile imports posted growth of 63.5 percent reaching US$ 3.5 billion from US$ 2.2 billion, reflecting both domestic cotton shortages and export demand. Raw cotton imports surged 236.6 percent in value and 300.4 percent in quantity to US$ 1.1 billion, highlighting shortage of domestic production of cotton. Imports of synthetic fiber (+9.2%), artificial silk yarn (+14.6%), and worn clothing (+21.2%) also rose, indicating rising demand for high-value production inputs. 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Regional trade trends indicate a mixed performance; while exports to Ukraine (+259%) and Turkmenistan (+22%) surged, shipments to Belarus (-68%), Russia (-20%), and Uzbekistan (-37%) declined. On the import side, notable increases were seen from Tajikistan (+324%), Kyrgyzstan (+290%), and Turkey (+92%), reflecting stronger regional trade flows, whereas imports from Azerbaijan (-95%), Russia (-87%), and Ukraine (-81%) fell sharply. In key bilateral engagements, Pakistan's exports to the US increased by 12 percent, reaching US$ 1.44B, with ongoing negotiations under TIFA for mangoes, dates, and beef market access. In South America, exports rose 13 percent to US$ 139M, with Pakistan ratifying the MERCOSUR Framework Agreement and working towards a Preferential Trade Agreement (PTA). 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Trade promotion initiatives included business forums with Turkiye, Azerbaijan, and Uzbekistan, fostering B2B engagements and unlocking millions in new trade deals. At the multilateral level, Pakistan finalized the Post-Brexit EU-UK tariff quota apportionment and ratified the Agreement on Fisheries Subsidies, reinforcing commitments to global trade governance and sustainability. These strategic initiatives pave the way for Pakistan's long-term economic resilience, diversified exports, and stronger global positioning. The economy usually faces a services trade deficit because growth in services imports outweighs the increase in exports. During July April FY 2025, trade deficit in Services remained US$ 2.5 billion compared to US$ 2.4 billion during the same period last year on account of high import of services US$ 9.4 billion while export of services remained US$ 6.9 billion, which posted 9.3 percent growth compared to the same period last year. Copyright Business Recorder, 2025
Business Recorder
3 hours ago
- Business Recorder
India's Nifty logs highest close of 2025
MUMBAI: Indian shares added to gains on Monday, lifted by the central bank's bumper monetary policy measures and signs of progress in US tariff negotiations with its key trading partners. The Nifty 50 rose 0.4% to 25,103.2, an eight-month high, while the BSE Sensex gained 0.31% to 82,445.21. Twelve of the 13 major sectors advanced. High-weightage financials gained about 0.5%, while private banks and state-owned banks added 1% and 1.5%. The broader small- and mid-caps rose about 1.6% and 1.1%, respectively, with the small-caps turning positive for 2025 so far. 'The market's positive movement reflects investor confidence, stemming from strong economic indicators, RBI's unexpected policy support,' said Dharan Shah, Founder, - a research driven AI powered investment platform. Both the Nifty 50 and Sensex jumped about 1% each on Friday after the Reserve Bank of India cut the repo rate by a bigger-than-expected 50 basis points and lowered the cash reserve ratio by 100 bps. Other Asian markets advanced on the day, ahead of the US-China talks in London aimed at mending a trade rift between the world's largest economies. Progress in US-India trade talks also lifted investor spirit, as both countries seeked consensus on tariff cuts before a July 9 deadline, Indian government sources said. Renewed optimism over global trade has triggered another wave of buying in Indian equities, according to analysts. IT companies, which earn a significant share of revenue from the US, rose 1% as a robust US jobs report on Friday also eased concerns over an economic slowdown. Among individual stocks, gold loan financiers such as Manappuram Finance and Muthoot Finance gained 7% and 4%, respectively, after the RBI eased gold loan rules. Bajaj Finance and Cholamandalam Investment rose 2.5% and 3.2% after multiple brokerages saw the RBI rate cut and CRR cut boosting non-bank lenders.
