By Bharath Rajeswaran and Vivek Kumar M
(Reuters) -India’s equity benchmarks fell for a second straight month in August, as punitive U.S. tariffs on Indian goods are expected to hit economic growth and corporate earnings.
The Nifty 50 index dropped 0.3% to 24,426.85 points at close on Friday, taking the month’s losses to 1.4%. The BSE Sensex declined 0.34% on the day and 1.7% on month. The indexes had lost about 3% in July.
The rupee slid to a record low on Friday, slipping past the 88-per-dollar mark for the first time ever.
In the week, the equity benchmarks lost about 1.8% as Indian markets underperformed their Asian and emerging market peers.
The U.S. on Wednesday imposed an additional 25% tariff on Indian goods over New Delhi’s purchase of Russian oil, doubling the earlier 25% duty.
The tariffs are likely to shave off 60-80 basis points from India’s GDP growth if they stay in place for a year, economists have said, potentially adding pressure on an already slowing economy.
Foreign investors have pulled out $3.3 billion from Indian stocks in August, the heaviest outflow since February, as tariff woes and weak corporate earnings dragged.
“We don’t expect a sharp selloff from here unless the trade situation worsens,” said Abhishek Goenka, founder and CIO of wealth management firm Billionz.
“But with earnings underwhelming, a prolonged sideways correction cannot be ruled out.”
Equity losses were broad-based, with 12 of 16 major sectors ending with monthly losses.
State-owned enterprises, drug makers, financials and energy stocks were among the top laggards in August.
Small- and mid-cap indexes slid 4.1% and 2.9%, respectively.
However, auto and consumption indexes, rose 5.5% and 2.7% in August, ahead of next week’s meeting of the Goods and Services Tax Council, where sweeping tax cuts will be discussed.
Among individual stocks, Hero MotoCorp jumped 19.4% while Maruti Suzuki climbed 17.3% in August on expectations of tax cuts.
Domestic economic growth data is due after market hours, with growth in April–June expected to slow.
Investors also await a key U.S. inflation reading, due later in the day, for cues on Federal Reserve’s rate outlook.
(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sumana Nandy and Mrigank Dhaniwala)
