Green Stocks July 28: Trade Deal Weighs Down Stocks

The US-India trade deal, or more precisely, the missing US-India trade deal, is beginning to weigh down with its full weight on the stock indices. With the August 1 deadline almost here, US insistence that there will be no further extensions, and of course the close of a US trade deal with the EU, the pressure on India to sign up is surely unbearably high. On the other hand, you have the knowledge that China, Brazil, Canada, Australia, and many other major economies remain outside the deal's ambit yet. Failure to close deals with all of these will weigh heavy on the US as well eventually.

We firmly believe that deal or not, the consequences of higher tariffs that the US has imposed, including the baseline 15% tariffs, will lead to significant negative consequences by the next quarter, when price increases will eventually flow down to consumers in the US. For India, however, the issue remains more immediate in terms of managing the fallout from higher US tariffs on its exports, especially product imports.

The green energy picture remains good, with Acme Solar reaping the rewards of a strong Q1 show with an 8% jump. That provided grist to Adani Green as well, besides NTPC Green and Tata Power, on a tough day for the markets.

The two module manufacturers likely to be most affected, Waaree Energies and Premier Energies, duly slumped as the market tried to figure out just how deep the higher tariffs could hurt. What was disappointing was the continued poor day for the EPC players, all of whom suffered losses ranging from 1-3%.

Considering the green energy players still lined up for their IPOs and the many that have planned for one by early 2026, you would wonder if there is any issue at all. But with each quarter of strong results and not-so-strong stock reactions, overall valuations for the sector continue to normalize to a level more comparable with other sectors. The message from this adjustment, that the market expects growth to taper off by the 2026-27 end, is a little deflating for many observers, and one hopes that it doesn't come to that.