India's BSE Sensex deepened losses to close nearly 1% down at 79,857.8 on Friday, a level last seen in May 9th, amid tariff-related concerns, unimpressive earnings and heavy foreign capital outflows. Trump’s tariff move—raising duties to a steep 50% from August 27 while firmly ruling out any trade talks—has rattled investors and raised fresh concerns over the future of US-India relations. Additionally, global financial institutions, including Goldman Sachs, have begun revising India’s economic outlook downward, citing the adverse effects of the Trump tariff blow. About 25 out of 30 stocks ended in negative terrain, led by Bharti Airtel, Tata Motors, M&M, Kotak Mahindra Bank, and Reliance Industries. On the other hand, NTPC, Titan, Trent, ITC, and Bajaj FinServ were only five gains. For the week, the Sensex posted a 0.9% decline, notching its sixth straight weekly loss, driven largely by uncertainty over new US tariffs.
India's former central bank governor Urjit Patel said that India's "worst fears" have materialised with the recent announcement. “One hopes that this is short term, and that talks around a trade deal slated to make progress this month will go ahead. Otherwise, a needless trade war, whose contours are difficult to gauge at this early juncture, will likely ensue," Mr Patel wrote in a LinkedIn post.
The damaging impact of the tariffs is why few expect them to last. With new rates starting 27 August, the next 20 days are critical - India's moves in this bargaining window will be closely watched by anxious markets.
The key question is whether Prime Minister Narendra Modi's government will quietly abandon trading ties with Russia to avoid the "Russia penalty" or stand firm against the US.
