Benchmark indices Sensex and Nifty declined in early trade on Monday amid fresh tariffs concerns and unabated foreign fund outflows. This is the fourth consecutive decline in the market. While the 30-share BSE benchmark Sensex dropped 343.83 points to 77,516.36 in early trade, the NSE Nifty declined 105.55 points to 23,454.40. While all major indices are in red, Nifty Metal is among the biggest sectoral losers and nosedived over 2 per cent. Last seen, it was down by 2.67 per cent.
“Any steel coming into the United States is going to have a 25 per cent tariff,” he told reporters on Sunday on Air Force One as he flew from Florida to New Orleans to attend the Super Bowl. When asked about aluminium, he responded, “aluminum, too” will be subject to the trade penalties.
However, he did not offer any details about the steel and aluminium duties, or the reciprocal tariffs.
Prominent metal stocks like SAIL and Vendanta are among the biggest losers and fell over 4 per cent. Other names like Tata Steel, JSW Steel and Hindalco Industries also slipped around 3 per cent in trade.
Here's what experts say
According to Anuj Gupta of IIFL Securities, the sharp fall in the metal stocks is because of US President Donald Trump's statement wherein he threatened to impose 25 per cent tariffs on all steel and aluminium imports.
"Metal index has nosedived because of Trump's statement on imposing a 25 per cent tariff on all imports of steel and aluminium. The uncertainty will be there but it is tough to predict for how long," Gupta said.
"Investors should opt to wait and watch policy for now and should avoid investing in metal stock for now," he added.
Shivkumar Goel, Director at Bonanza, also advised investors to have a cautious approach for the short term.
"India is not a major exporter of steel and aluminium to the US, with exports of iron and steel items to the US accounting for $3 billion annually. However, the imposition of tariffs may lead to a diversion of steel exports from other countries, like China to India, increasing steel imports in India. However, the Ministry of Steel had previously proposed a 25% safeguard duty on certain steel products to counter such scenarios. The immediate impact of Trump's announcement was felt in the Indian stock market, with metal stocks experiencing a sharp decline. The Nifty Metal index tumbled, with major losers including
Vedanta, SAIL, Tata Steel, and JSW Steel. We advise a cautious approach in the market for the short term. Investors should closely monitor government responses and trade negotiations," Goel added.
Trump's tariff threat
The US President previously threatened 25 per cent import taxes on all goods from Canada and Mexico, though he paused them for 30 days barely a week ago. At the same time, he proceeded to add 10 per cent duties on imports from China.
Trump has alternately said he sees import taxes as tools to force concessions on issues such as immigration, but also as a source of revenue to help close the government's budget deficit.