Indian equity markets are anticipating a higher opening on Friday, August 8, 2025, indicating a recovery from recent declines. This optimism is largely fueled by the announcement of a potential summit between U.S. President Donald Trump and Russian President Vladimir Putin. The prospect of this high-level meeting is generating hope for a de-escalation of U.S. sanctions impacting India's oil trade with Russia.
Thursday saw a market dip of nearly 1%, a reaction to President Trump's imposition of a 25% tariff on Indian goods, effectively doubling the existing levy to 50%. This retaliatory measure was a direct response to India's continued oil purchases from Russia. The confirmation of the summit by the Kremlin, expected in the coming days, offers a potential pathway to ease these escalating trade tensions. The Indian rupee is also expected to start the trading day stronger, trading around 87.48-87.52 against the U.S. dollar, an improvement from its previous close of 87.7025. This appreciation is partly due to a reversal in short positions, influenced by the Reserve Bank of India's efforts to defend the USD/INR level around 87.95.
Analysts are advising investors to focus on fundamentally strong stocks such as JSW Energy and Hindustan Aeronautics Limited, identifying them as key anchors amidst the current market volatility. Moody's and other economists have cautioned that the elevated tariffs could impact India's manufacturing sector and potentially slow GDP growth by approximately 0.3% for the fiscal year 2025-26. The increased tariff gap compared to other Asia-Pacific nations may also hinder India's ability to attract global investment in the long term. Despite these concerns, India's strong domestic demand and resilient services sector are expected to provide a buffer against the economic headwinds. The potential impact on exports, particularly in labor-intensive sectors like textiles, is a significant point of attention, with some estimates suggesting a substantial reduction in outbound shipments to the U.S. market. The government is reportedly exploring incentives and support measures for affected export sectors to mitigate the impact.
In the energy sector, India's reliance on Russian oil has become a focal point of the trade dispute. While discounted prices of Russian crude have offered economic advantages, the U.S. tariffs introduce a complex challenge for Indian refiners. The situation highlights the delicate balance India must strike between energy security, economic interests, and its strategic relationships. The upcoming 21-day window before the additional tariffs fully take effect provides an opportunity for diplomatic engagement and potential negotiation to find a mutually agreeable resolution.