Sensex rebounds over 1,100 points from day's low; why is Indian stock market rising despite Trump's 25% tariff shock?

Mint

31-07-2025

Shrugging off concerns over the 25 per cent tariff imposed by US President Donald Trump, the Indian stock market staged a smart rebound in intraday trade on Thursday, July 31, with stocks such as Hindustan Unilever (HUL), ICICI Bank, and ITC leading the recovery.
The Sensex jumped over 1,100 points from the day's low, while the Nifty 50 reclaimed the 24,950 level. Volatility index India VIX rose nearly 4 per cent during the session.
Around 2:20 PM, the Sensex was 166 points, or 0.20 per cent, up at 81,648, while the Nifty 50 was 54 points, or 0.22 per cent, up at 24,909.
The rise in the benchmark indices appears to stem from the belief that Trump's tariffs will impact certain sectors and stocks, but not the overall market.
Trump announced a 25 per cent tariff and a penalty on India on July 30, effective August 1. These tariffs are likely to affect certain sectors, such as textiles, auto components, leather goods, gems and jewellery, and some food exports.
"The tariff is likely to impact specific sectors and stocks rather than the broader market, as India's exports to the US account for only about 2 per cent of the country's GDP. Its effect will be felt more at the micro level," said G Chokkalingam, the founder and head of research at Equinomics Research Private Limited.
Many experts view Trump's July 30 tariff announcement as a pressure tactic to push India to open up its agricultural sector. The market is somewhat confident that further negotiations could bring tariffs down to the 15–20 per cent range, which would not be significantly negative for the market.
"Our sense is that the tariff announced yesterday was more of a pressure tactic. This is why the knee-jerk reaction in the market didn't sustain. Over time, it's possible that tariffs may settle around 15 per cent or so, which is providing some comfort to the market — and that's why we're seeing a rebound," said Pankaj Pandey, the head of research at ICICI Securities.
The focus, eventually, will come back to earnings and macroeconomic growth. The domestic market is discounting earnings revival in the second half of the financial year.
"Q1 earnings have been largely on expected lines. We expect earnings to revive in the second half of the year, which can help the market sustain its gains," said Pandey.
(This is a developing story. Please check back for fresh updates.)
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