MOFSL said Nifty trades at 20 times FY26 earnings, near its long-term average of 20.6 times and offers limited near-term upside. Markets across Japan, Hong Kong and China saw a meltdown at open, and India is bracing for a similar impact, as Donald Trump's 'Liberation Day' sent shivers down investors' spines. The US President imposed 26 per cent reciprocal tariff on India and 34 per cent on China. Japan, the UK, Vietnam, South Korea and Taiwan were slapped with up to 46 per cent tariffs. This may stoke inflation in the US, hit consumer demand there and drag the economy into recession.
A gap-down opening for key indices in Nifty and Sensex is all likely. Auto, IT and pharma stocks would be on investor radar.
Ankur Sharma, Market Analyst, VT Markets noted that top US automakers fell sharply in after-hours trading, with General Motors down more than 7 per cent, Ford off 4.6 per cent and Stellantis 4 per cent. Japan automakers also plunged with Nissan, Toyota and Honda falling 2-3 per cent while Hyundai Motor and Kia in South Korea slipping about 4 per cent each.
"We can even expect a high impact on the Pharma industry. While specific tariff percentages have not been detailed, the US is a significant market for Indian pharmaceutical exports. Increased Tariffs potentially lead to a decline in export revenues. Another sector which will be highly impacted by this is IT. The US has indicated potential tariffs on IT services, a sector where India has substantial exports," Sharma said.
Gift Nifty was hinting at 1.5 per cent fall for Nifty at open. In Asia, Japan's Nikkei tumbled 3.22 per cent while Hong Kong's Hang Seng declined 1.90 per cent. Markets in Korea and Australia fell up to 2 per cent. Dow Jones futures, in fact, were trading at 41,656, down 836 points or 1.97 per cent.
The US insisted that it used to levy 2.5 per cent tariff on passenger vehicle imports against India's 70 per cent. For rice in the husk, the US used to impose a tariff of 2.7 per cent against India's 80 per cent. Apples enter the United States duty-free, but India imposed 50 per cent import duty on the same, it said.
The US insisted it had one of the lowest simple average most-favored-nation (MFN) tariff rates in the world at 3.3 per cent, while many of its key trading partners like Brazil (11.2 per cent), China (7.5 per cent), the European Union (5 per cent), India (17 per cent), and Vietnam (9.4 per cent) have simple average MFN tariff rates that are significantly higher.
"The U.S. reciprocal tariffs are set to have a multifaceted impact on India's economy, with significant effects on key export sectors and associated industries. The magnitude of these impacts will depend on the duration of the tariffs and the ability of Indian industries to adapt to the evolving trade landscape," Sharma said.
“India, very, very tough. Very, very tough. The Prime Minister just left. He’s a great friend of mine, but I said, ‘You’re a friend of mine, but you’re not treating us right. They charge us 52%. You have to understand, we charge them almost nothing for years and years and decades, and it was only seven years ago, when I came in, that we started with China,’” PTI reported Trump as saying.
MOFSL said Nifty trades at 20 times FY26 earnings, near its long-term average of 20.6 times and offers limited near-term upside.
"We reckon the upside from here will be a function of stability in global and local macros and continued earnings delivery versus expectations. The expectations for FY26 corporate earnings are still somewhat elevated, in our opinion, given the underlying macro-micro backdrop and are thus ripe for further downgrades," it said.