Auto, IT Stocks Skid Amid US Tariff Uncertainty; Maruti, Tech Mahindra Fall Up To 2%
Shares of auto & IT companies declined amid uncertainty over impending hike in US tariffs and absence of a India–US trade agreement
Auto, IT Stocks Slide: Shares of auto and IT companies declined on July 7 as uncertainty over the impending hike in US tariffs and the absence of a finalized India–US trade agreement rattled investor sentiment. The Nifty Auto and Nifty IT indices slipped into negative territory, trading at around 23,949 and 39,004, respectively, in the morning session.
The 90-day pause on US President Donald Trump's proposed tariff hike is set to expire on July 9, with the new elevated rates expected to come into effect on August 1. So far, India and the US have not announced any formal trade pact.
On July 5, President Trump said that the US would send formal letters to 10–12 countries outlining new reciprocal tariffs. Describing these as 'take it or leave it" offers, he said the letters would be dispatched by July 7 and the final rollout would conclude by July 9. 'The money is going to come to the United States from August 1," Trump told reporters at Joint Base Andrews.
Indian Commerce Minister Piyush Goyal said India would not rush into any agreement due to external deadlines. 'India does not enter into any trade agreement based on deadlines. We will sign a deal with the US only when it is fully finalised, properly concluded, and in the national interest," Goyal stated.
10% Tariff on BRICS Allies Announced
Adding to market anxiety, Trump also announced plans to impose an additional 10% tariff on countries aligning with what he termed the 'anti-American policies of BRICS"—just as Prime Minister Narendra Modi addressed the BRICS summit. In response, BRICS nations issued a joint statement expressing 'serious concerns" over rising unilateral tariffs and their adverse effects on the global economy.
India has already notified the World Trade Organization of its intent to impose retaliatory tariffs in response to Washington's 25% duty on automobiles and auto parts, which could impact $2.89 billion worth of Indian exports.
Export-driven sectors bore the brunt of these developments. Maruti Suzuki shares fell over 1% to Rs 12,510, while Bharat Forge dropped nearly 1%. Tata Motors also traded in the red.
In the IT pack, Tech Mahindra, Mphasis, and HCL Tech slipped up to 2%. Infosys, Wipro, TCS, and Persistent Systems saw marginal losses. Analysts noted that the weakening US dollar and concerns over delayed outsourcing decisions could weigh on IT firms, given their heavy dependence on the US market.
'With the tariff deadline nearing, all eyes are on the anticipated US–India trade deal. Market participants remain optimistic about a favorable resolution, which could serve as a key catalyst for the next leg of the market's upward trajectory," said Bajaj Broking.
Harshal Dasani, Business Head at INVasset PMS, stated, 'The mood across Dalal Street is far from celebratory. Both Nifty Auto and Nifty IT indices slipped into the red in early trade, signaling investor caution around sectors directly exposed to Donald Trump's latest tariff regime."
He further cautioned that with auto components facing a 25% duty under Section 232 and no exemptions in place, companies like Bharat Forge, Motherson, and Tata Motors are at risk of margin pressure and demand delays from US-based OEMs.
'For IT, the concerns are more indirect—ranging from delays in outsourcing decisions to potential visa restrictions. And while pharma may be insulated, for now, the threat of non-tariff barriers looms large under Trump's 'reciprocal tariff doctrine,'" Dasani concluded.
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