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Trump's Tariff Salvo & RBI Policy To Steer Nifty's Path Today| Opening Bell Live

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  Published in Stocks and Investing on Monday, September 29th 2025 at 9:27 GMT by moneycontrol.com
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Nifty’s Path Uncertain as Trump’s Tariff Salvo Meets RBI’s New Policy

When the U.S. “trumpet” rang loud on Tuesday, the Indian equity market was already rattled by a fresh wave of uncertainty. While traders were busy dissecting President Donald Trump’s latest tariff announcement – a surprise “salvo” that threatens to hit key Indian export categories – the Reserve Bank of India (RBI) released a policy note that could shift the market’s direction. As the Nifty 50 opened its bell, investors were left to navigate a cross‑currents of geopolitical risk and monetary policy, both of which may dictate the index’s trajectory for the rest of the session.

Trump’s Tariff Surprise: A New Threat to Indian Exports

In the minutes preceding the market open, the U.S. Federal Trade Commission released a press statement that the Trump administration would impose additional tariffs on a set of goods that were previously under a “phase‑out” regime. Among the items flagged were India‑manufactured pharmaceuticals, textiles, and a handful of high‑tech components that form a sizeable portion of the country’s export basket. According to a Bloomberg estimate, the new duties could add approximately 2–3% to the tariff rate for these categories, raising concerns about a potential 5–7% dip in India’s export earnings for the next quarter.

“India’s export base is diversified, but we are not insulated from U.S. tariff shocks,” said Rajesh Kumar, head of Macro Research at Nuvoco Analytics. “If the U.S. pushes further on the tariff front, the ripple effect could extend beyond the immediate trade ledger and touch the broader corporate earnings projections, especially for the manufacturing and pharma sectors.”

The tariff announcement comes on the heels of a prior U.S. decision that lifted duties on 13 key Indian export items – a relief that had buoyed the Nifty in late‑January. The new surprise, therefore, appears to be a re‑versus in the trade relationship that could have a “drag on the index” if market participants begin to reassess the growth outlook for the sector.

RBI’s Policy Note: A Mixed Bag for the Market

In a seemingly counter‑to‑market move, the RBI’s policy note, released earlier that morning, confirmed that the central bank will keep the repo rate at 4.00% but will introduce a more accommodative stance for the wholesale market through a “Credit Control Mechanism” (CCM) policy. The note states that banks will be able to tap the overnight market at a slightly lower effective rate, potentially providing a liquidity buffer for the banking sector.

“The RBI’s decision to maintain the repo rate is reassuring to risk‑averse investors,” explained Ms. Anjali Sharma, senior economist at Edelweiss Capital. “However, the CCM move, while providing immediate liquidity, could also signal that the RBI is preparing for a slower economic pace in the near future. This is why we are seeing a split in the sentiment – some traders are bullish on the liquidity lift, whereas others are skeptical about a possible tightening later on.”

The RBI’s policy notes are closely watched for hints of a future rate hike or a shift in monetary tightening. In the days following the note, analysts noted that the central bank is “signaling a ‘wait‑and‑see’ approach” rather than any immediate tightening. This has led to a cautious stance by the Nifty’s mid‑cap stocks, which tend to be more sensitive to rate changes.

Opening Bell: Nifty 50 Takes a Mixed Turn

At the Nifty’s opening bell, the index surged by 35 points (0.07%) to trade at 19,600. While the initial rally might be interpreted as a short‑term buying frenzy, the gains were quickly neutralised as the market digested the two conflicting stimuli. By the 10‑minute mark, the index had fallen 70 points (0.14%) from the open, suggesting that the underlying sentiment remained bearish.

The IT sector, which had shown a slight uptick earlier, posted a 0.4% gain, led by key players such as Infosys and TCS, which saw an increase in trading volume of 15–18% over the previous session. The banking sector, however, fell by 0.8%, with major banks like HDFC Bank and ICICI Bank seeing their share prices dip 1.2% and 0.9% respectively. The decline is thought to reflect concerns over the RBI’s policy note and the possibility of a tightening in the medium term.

Oil‑linked stocks such as Reliance Industries and GAIL took a hit, falling 0.6% and 0.5% respectively. The dip is believed to stem from fears that the U.S. tariff move could reduce the demand for Indian crude exports, thereby impacting the oil‑sectors’ revenue projections.

In contrast, the pharmaceutical index gained 0.3%, buoyed by companies like Sun Pharma and Cipla, which announced a 3% increase in their earnings guidance. These firms are less likely to be affected by the U.S. tariffs, as their exports are largely geared towards European and African markets.

Analyst Take‑Aways

• Dr. Suresh Iyer, Professor of International Trade at the University of Delhi: “The market’s reaction is a textbook example of risk‑aversion. Even though the RBI’s policy appears neutral, the new U.S. tariffs create a supply‑chain shock that investors fear could reverberate through the earnings cycle. For the next 48 hours, we expect heightened volatility.”

• Arun Kapoor, Senior Analyst at ICICI Securities: “The immediate response was a cautious sell‑off by the risk‑averse investors. The Nifty’s reaction underscores a broader sentiment that the US‑India trade relationship remains fragile. That being said, the RBI’s CCM is a sign of prudence – it keeps the market afloat without a direct rate hike.”

• Lydia Gupta, Head of Emerging Markets at Morgan Stanley: “While the tariffs are a short‑term risk, the macro backdrop – a slow global growth outlook and potential RBI tightening – will likely weigh on the Indian market. It is prudent for institutional investors to be wary of over‑exposure to high‑beta stocks.”

Looking Ahead: What Could Shape the Nifty’s Path?

1. U.S. Trade Negotiations – The US Treasury’s subsequent discussions with Indian officials will be closely monitored. Any sign that the tariff could be reduced or lifted will provide a tailwind to the index.

2. RBI’s Monetary Policy – The central bank is expected to maintain a “steady hand” in the near term. However, if global growth remains sluggish, the RBI might consider a “rate cut” later this quarter to shore up domestic demand.

3. Corporate Earnings – For firms heavily reliant on U.S. exports, earnings guidance in the coming weeks will be a key indicator. Companies such as Jindal Steel and Gujarat Gas, whose revenues are strongly export‑oriented, could be particularly affected.

4. Market Technicals – The Nifty is currently trading below its 200‑day moving average, indicating a bearish trendline. A sustained rally would require a breakout above the 30‑day moving average and a reversal of the daily high.

Bottom Line

The Nifty 50’s opening bell on Tuesday was nothing short of a balancing act – between a geopolitical threat that could dent Indian exports and a central bank’s measured policy that aims to preserve market liquidity. As the day unfolds, traders will be watching the reaction of key sectors – especially IT, banking, and pharmaceuticals – while keeping an eye on the U.S. trade talks and the RBI’s subsequent policy actions. In an environment of heightened volatility, the market is likely to oscillate rather than commit to a single direction. The next 12–24 hours will determine whether the Nifty finds a foothold or continues to wobble amid an uncertain global backdrop.