The Indian market is once again facing uncertainty as the US is set to impose a 100% tariff on pharmaceutical imports from October 1. The impact on India's generic drug exports remains unclear, and pharmaceutical stocks across Asia have already shown signs of decline.
In trade talks, the US has taken a firm stance, stating that it will withdraw a 25% tariff and reduce a previously implemented 25% tariff if Russia halts its oil purchases. This move could significantly impact global markets, with hopes for an agreement expected by November. The ripple effect has already been felt in the US market, with shares of Infy and Wipro falling by more than 2%. There's growing concern that IT stocks could also be affected by these ongoing developments.
Meanwhile, foreign investment in the Indian market has dropped sharply, with daily sales nearing ₹5000 crore. This, coupled with a rising US dollar index, is contributing to a weakened rupee and increasing market concerns.
US President Donald Trump has announced that starting October 1, pharmaceutical imports, particularly patented and branded drugs, will face a 100% tariff. This decision is expected to significantly impact pharmaceutical export companies in India.
The primary concern is how this will affect Indian companies exporting generic drugs (those whose patents have expired). Major pharmaceutical exporters to the US such as Dr. Reddy's, Sun Pharma, Arvind, Lupin, Biocon, Glenmark, Cipla, and others are facing potential disruptions in their business operations. Asian pharmaceutical stocks, particularly in the US market, have already experienced significant declines.
To avoid these tariffs, companies may need to set up manufacturing plants in the US. Recently, large pharmaceutical companies like GSK and AstraZeneca announced investments to establish production plants in the US. The announcement has been followed by comments from Trump, who mentioned that tariffs on medicines could gradually rise to 250%.
Additionally, new tariffs have been imposed on large trucks (25%) and kitchen equipment such as cabinets (50%).
European stocks took a hit on Thursday. The US has begun studies to impose tariffs on medical device imports, which caused significant declines in the share prices of medical technology companies. On a more positive note, H&M saw better-than-expected results, with its stock rising by 9.8%.
US market indices experienced losses for the third consecutive day. Despite significant investments in the artificial intelligence sector, the market remains volatile. Oracle shares fell by 5.5%, and Tesla's stock dropped by 4.4%. Meanwhile, Intel, which received a government investment, saw a 10% rise in its stock price.
The Dow Jones index closed 173.96 points (0.38%) lower at 45,947.32, while the S&P 500 lost 33.25 points (0.50%) to end at 6604.72. The Nasdaq Composite dropped by 113.16 points (0.50%) to 22,384.70.
US futures are also showing a slight downward trend today, with the Dow and S&P both down by around 0.04% and 0.05%, respectively, and the Nasdaq dropping by 0.12%.
Asian markets are also showing a downward trend today, with pharmaceutical stocks taking a hit. The Japanese market dropped by 0.20%, while South Korea saw a 2% decline. The Australian market also faced losses. Hong Kong and Chinese markets started with small losses.
The Indian market has shown continuous declines for five consecutive days, providing little hope for investors. The issues surrounding US tariffs, including those related to the H-1B visa situation, remain unresolved. Foreign investors continue to sell off their shares without restraint.
Apart from defence and metals, every other sector suffered losses yesterday. The Nifty 50 index has fallen below the 25,000 mark.
There are concerns over Tata Motors, which is facing potential losses of $275 million due to a cyber attack on their Jaguar Land Rover division. Production of JLR vehicles has been disrupted since September 1, though it is expected to resume next week. Tata Motors' stock dropped by 2.9% as a result.
International markets saw an uptick in the prices of copper, with Hindustan Copper seeing a 6% rise. Vedanta and Hindustan Zinc also saw gains of more than 3%.
Defence companies performed well, but many others experienced profit-taking. Kochi Shipyard, HAL, Bharat Electronics, and Data Patterns all saw gains, while companies like Garden Reach, Mazagon Dock, Astre, and MTAR saw losses.
The Nifty 50 closed 166.05 points (0.66%) lower at 24,890.85, while the Sensex fell by 555.95 points (0.68%) to close at 81,159.68. The Bank Nifty also dropped by 145.30 points (0.26%) to 54,976.20. The Mid-Cap 100 index lost 368.55 points (0.64%) to reach 57,555.90, and the Small-Cap 100 index fell by 102.75 points (0.57%) to 17,966.80.
Gold prices, which had recently declined, rebounded only to fall again. The strength of the dollar and expectations that interest rates may rise have contributed to these fluctuations. The US GDP growth exceeded expectations, while job losses were lower than anticipated, which reduced the chances of an interest rate cut by the Federal Reserve in its October meeting.
Technical analysts have pointed out that gold prices have been in an overbought position, with its Relative Strength Index (RSI) currently at 89.72. Any index above 70 indicates an overbought condition. This is the highest RSI since 1980, and many expect gold prices to reach $5,000 by the end of the year.
Yesterday, gold prices attempted to break $3,760 per ounce but fell back to $3,741. Analysts expect gold to decline further if the Personal Consumption Expenditure (PCE) index rises by over 3%, compared to the previous month's 2.9%.
In Kerala, the price of 22-carat gold dropped by ₹680 to ₹83,920 per pavan.
The price of copper has risen due to production disruptions at major mines in Indonesia and Peru. The price of copper remained above $11,000 per tonne. At the London Metal Exchange, copper reached its highest point during the day. Following copper, zinc prices also rose, with industrial metals experiencing a positive trend on Thursday.
Copper rose by 4.69% to close at $10,323.50 per tonne, while zinc rose by 3% to $3,011.15. Aluminium gained 0.16% to reach $2,653.55 per tonne. Nickel, tin, and lead also saw gains.
In the international market, rubber prices rose by 1.11% to $1.7340 per kilogram. Cocoa dropped by 1.73%, reaching $6,925.73 per tonne. Coffee increased by 0.75%, while tea remained unchanged. Palm oil prices rose by 1.37%.
The dollar index rose by 0.60% on Thursday, closing at 98.55. This increase is attributed to expectations of a delay in interest rate cuts.
In the currency markets, the dollar strengthened, with the euro falling to $1.1664 and the pound dropping to $1.3334. The Japanese yen weakened to ¥149.82 per dollar.
As US GDP and employment figures exceeded expectations, the possibility of an interest rate cut has slightly diminished, which contributed to a drop in US Treasury bond prices. The yield on 10-year bonds decreased to 4.176%.
The Indian rupee made slight gains on Thursday, closing at ₹88.67 against the dollar. The strengthening of the dollar index, however, could weaken the rupee further. The Thai baht and Philippine peso also saw declines, which supported the rupee's recovery.
China's currency remained stable, with the yuan trading at 7.13 per dollar, down from 7.10 on Wednesday.
After a brief dip, crude oil prices have resumed their upward trajectory. On Thursday, Brent crude fell below $69 per barrel before climbing again. The improvement in US GDP growth expectations is the main factor driving the rise in crude prices. Yesterday, Brent crude closed at $69.64 per barrel, and this morning it remains around $69.63, while WTI crude stands at $65.29 per barrel. Natural gas prices rose by 0.8%.
Cryptocurrencies have also faced significant declines. Bitcoin dropped by 4% and Ethereum by 7%, while Solana fell by 9%. Bitcoin dropped to $108,656, though it has slightly recovered to $109,600 this morning. Ethereum is trading at $3,950, and Solana at $196. The rise in the dollar's strength and the expectations of US growth have pressured cryptocurrencies.