Following the US Supreme Court’s decision to overturn President Donald Trump’s tariff order made under the International Emergency Economic Powers Act (IEEPA), Indian stocks are expected to open higher on February 23.
With this decision, the 18% duty on Indian imports is essentially lifted, providing local markets with some respite.
Though Trump signed a new executive order under Section 122 of the 1974 Trade Act imposing a 15 percent tariff on all countries, beginning February 24, optimism is still cautious.
Market analysts predict that any good momentum in Indian stocks will likely be fleeting given the ongoing uncertainties and frequent changes in tariff policy. The GIFT Nifty was up 300 points, or 1.25 percent, at 25,886 at of 2:45 am, suggesting that Indian markets were off to a good start.
As tariff ambiguity continues, volatility increases
Investor morale is still affected by the uncertainties around the final tariff structure, despite the anticipated good opening. Following the conclusion of the earnings season and fresh worries about disruptions brought on by artificial intelligence, the Nifty stayed mostly rangebound last week.
The India VIX, a measure of volatility, increased to 14.36, the highest level since February 1, and is still well over important moving averages, indicating that investor worry is on the rise.
When questioned about the tariff rate that would apply to India, Trump reportedly responded that it would stay at the previously agreed-upon 18 percent.
“In the short future, markets are probably going to continue to be anxious. Until it is clear where tariff rates will ultimately stand, any temporary increase is unlikely to last,” stated Gaurang Shah, vice-president of Geojit Financial Services.
In spite of the Supreme Court’s decision, he continued, Trump might look into other legal options to restore the 18 percent tariff rate that was once agreed upon with India.
“Markets are likely to stay rangebound until the trade agreement, which is anticipated to be completed in March, provides certainty. The Nifty should hold the 25,400 mark, as it has in recent sessions, Shah stated.
Important levels and the state of the market
Any brief increase in markets is unlikely to last, according to Ajit Mishra, Senior Vice-President of Research at Religare Broking.
“We anticipate the reinstatement of the 18% tariff. It is extremely improbable that the final tariff rate would be less than the previously negotiated amount because India’s tariff rate has not yet been formally notice. Until there is clarification, market volatility is likely to continue even though the present 15% tax is only in effect for 150 days, he said.
The immediate pivot mark for the upcoming week is 25,500, according to Hariprasad K, founder of Livelong Wealth.
“A move towards 25,700 could be possible if we can maintain above this level. On the flip side, a decline below 25,500 and a clear breach of 25,350 could cause market sentiment to revert to a pessimistic slant,” he continued.
