Stock market outlook: US tariffs put textiles and gems stocks in focus, analysts see range-bound trade

Stock market investors may remain jittery in the near term after the steep 50 per cent tariff on Indian goods entering the United States came into effect on Wednesday, with analysts flagging textiles, gems and jewellery, and leather stocks as likely to remain in focus when trading resumes on Thursday.The additional 25 per cent levy imposed by US President Donald Trump on India for its Russian oil purchases has taken the overall tariff burden to 50 per cent. Analysts said the move was anticipated and while the market may open with cuts, panic selling is unlikely.“The market will open with cuts. But a panic is unlikely since this 50 per cent tariff is not unexpected. FIIs may continue to sell dragging the market down. But at lower levels, there will be aggressive buying by DIIs who are flush with funds,” V K Vijayakumar, Chief Investment Strategist at Geojit Investments, told PTI.Export-oriented sectors expected to feel the brunt include textiles and clothing, gems and jewellery, shrimp, leather, footwear, animal products, chemicals, and electrical and mechanical machinery. However, pharma, energy products, and electronic goods are outside the ambit of the sweeping duties.Puneet Singhania, Director at Master Trust Group, said, “The 25 per cent additional US tariff, taking the aggregate duty on Indian imports to 50 per cent, has already rattled the markets.

On August 26, Nifty fell 255.70 points to 24,712, and the Sensex declined 849.37 points to 80,786. Although defensives such as pharma and electronics remain relatively well-insulated, export-oriented sectors such as textiles, gems and jewellery, chemicals & organic compounds and agricultural are encountering strong headwinds.

”Markets may remain volatile as investors absorb the trade shock, Singhania added, cautioning that “export-linked stocks may experience earnings downgrades, while domestic demand-driven sectors, as well as defensives such as pharma and IT services, may experience relative interest.”According to BSE and NSE data, foreign institutional investors offloaded equities worth Rs 6,516.49 crore on Tuesday, while domestic institutional investors bought Rs 7,060.37 crore worth of shares, offsetting some pressure.The US accounted for about 20 per cent of India’s $437.42 billion goods exports in 2024-25, making the new tariffs particularly significant. “The first move will be sentiment-driven. The 25 per cent additional tariff on Indian goods takes the total duty close to 50 per cent, and that raises concerns for sectors like textiles, gems and jewellery, leather, and seafood. In the near term, the market may remain range-bound with sector rotation, not a sharp correction,” said Trivesh D, COO of online brokerage Tradejini.