- The short (timeline & impact)
- Stocks: baskets & levels to watch at the next open
- Rupee & rates: trader checklist
- HS codes: who gets hit first
- RBI liquidity watch
- FAQ
The short
- Effective: Additional 25% duty took effect at 12:01am EDT on Aug 27, lifting many Indian goods to ~50% total U.S. tariffs.
- Trading day note: India’s cash equities were shut today (Ganesh Chaturthi). First full price discovery lands at the Aug 28 open.
- Pre-open cues: INR had already softened into the event; exporters and tariff-exposed midcaps are the stress points to watch first.
Stocks — what to watch at the open
Exporter baskets
- Apparel/textiles, gems & jewellery, footwear, furniture, chemicals.
- Screen for U.S. revenue share & margin buffers; prioritise companies with ex-tariff clauses and diversified lanes (EU/Japan).
Index & flows
- Watch exporters’ sub-baskets vs Nifty/BankNifty; overlay with FII flow proxies and USD/INR.
- GIFT Nifty/ADRs pre-signal; but cash session on Aug 28 dictates real P&L.
Into the weekly/monthly expiry window, expect wider opening spreads and tighter risk budgets from market-makers.
Rupee & rates — trader checklist
- FX: Stagger hedges (1–3–6m); prefer collars over outright longs when implieds spike.
- Rates: Track overnight system liquidity; belly of the G-sec curve stabilises if RBI smooths.
- Credit: Tighten limits for U.S.-dependent MSME receivables; lift monitoring frequency.
HS codes — who gets hit first
| Bucket | Examples | First-order risk | Spreading |
|---|---|---|---|
| Apparel/Textiles | HS 61/62/63 | Order deferrals; discount asks | Shift to FOB renegotiations; mix to EU/Japan |
| Gems & Jewellery | HS 71 | High-ticket demand shock | Bonded-warehouse routing; insured inventory |
| Footwear | HS 64 | Retail pullbacks; inventory overhang | Make-to-order; shorter cycles |
| Furniture | HS 94 | Housing-linked slowdown | Duty-drawback via 3PL; SKU rationalisation |
| Chemicals | HS 28–38 | Contract repricing | Cost pass-through; long-dated supply contracts |
RBI liquidity watch
Governor’s “ready to act” line implies flexible operations to smooth FX/curve volatility before any stance or rate decision. Watch LAF usage, OMO/Twist hints, and money-market prints around settlement days.
Playbook Keep cash buffers, pre-clear higher FX cover ratios, and brief boards on ex-tariff pricing language.
FAQ
- Are all sectors hit? No. Pharma/IT see limited direct tariff impact; watch second-order demand effects.
- When will we see the market’s first take? On Aug 28 at the cash open; today (Aug 27) was a trading holiday.
- Could RBI cut rates now? No pre-commitment—expect liquidity smoothing first; policy depends on incoming data.