Stock market: Trump tantrum wipes Rs 45,57,765 crore off investor wealth since Jan 20

The US President Donald Trump has denied he intentionally engineering a stock market selloff, saying he could not foresee investor reactions. But his tariff war on trading partners has hit stock investors hard globally. While India is expected to be impacted moderately by tariffs announced so far, compared with other emerging markets, Trump tantrums have already shaved Rs 46 lakh crore off Indian stock investor wealth, as suggested by the BSE market capitalisation.

Since he took oath as the 47th US President, India's m-cap has dropped  45.57 lakh crore to Rs 3,86,01,961 crore today from Rs 4,31,59,726 crore on January 20.  In the 2024, Trump and the Republicans gained control over all the three branches of the US government. Trump also won the popular vote, something he was unable to do in 2016.

The stock market hates uncertainty, and that is at its peak these days. This was reflected in the fear gauge India VIX, which spurted a massive 52.27 per cent to 20.95 today. The gauge reflects volatility in the market over the next 30 days.

Trump, initially announced tariffs on metals and auto and auto components and later came out with as high as 46 per cent tariffs for countries like Vietnam. Many market participants are under how the US tariffs were arrived at.

In India's case, the applicable 'discounted' tariff is set at 26 per cent against the 'derived' tariff rate of 52 per cent -- the tariff that India charged to the US. "Medicine" can be necessary at times, Reuters reported Trump as saying on the recent US market fall.

The US administration said the reciprocal tariffs or the blanket rate were arrived at after considering the non trade barriers including the currency manipulation undertaken by the trade partners.

"Globally markets are going through heightened volatility caused by extreme uncertainty. No one has a clue about how this turbulence caused by Trump tariffs will evolve.  Wait and watch would be the best strategy in this turbulent phase of the market, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
 
Vijayakumar said the irrational Trump tariffs will not continue for long and that India is relatively better placed since India’s exports to the US as percentage of GDP is only around 2 per cent and, therefore, the impact on India’s growth will not be significant.

"India is negotiating a Bilateral Trade Agreement with the US and this is likely to be successful resulting in lower tariffs for India," he said adding that Trump is unlikely to impose tariffs on pharmaceuticals.