Green Stocks July 31- Trump Quake Leaves Stocks Shakens

The day arrived, and President Trump duly delivered the bad news of tariffs on India, adding a penalty for good measure due to its Russia oil trade. But the markets were more resilient than many might have expected, even though volatility expectedly spiked. The green pack suffered more than the broader market, with almost all stocks in our basket, other than the off one in Oswal Pumps or even Suzlon, managing to hold fast and even gain a little. 

Not too much can be, or should be, read into a day like today, other than perhaps the obvious hit to Waaree Energies and Premier Energies,  the two key solar module makers who might have to recalibrate their US market expectations. Waaree might find itself expediting its US expansion to counter the impact of Tariffs. Other firms, most of whom are overwhelmingly domestic-focused, will simply see collateral damage in the form of demand contraction, possibly, if this petulance from Trump is dragged on beyond a month or more. 

A petulant Trump might have made his wishes clear for capitulation, but India has surprised many, including Trump himself, by holding out thus far. This steadfast adherence to stated positions marks out the country among detractors and well-wishers both, and it remains to be seen how the next few steps are planned to minimise the fallout of the higher tariffs. The big unknown is, of course, the as-yet-unspecified 'penalty' that has been promised in due course, which could be as early as the next 10 days, the time given by Trump to Putin to wrap up the Ukraine war. 

With the US effectively painting India into the same corner as China, Russia, Canada, and Brazil, one has to wonder just how long US markets can shrug off the rising prices of products from these countries. With base tariffs set at 15% in most cases, we believe the impact of higher tariffs and contracting demand will more than offset the spike in tariff collections for the US government.

By September end, the first clear signs should be visible, giving the markets just enough time to wonder if a black Monday is coming back in October this year. Considered a black swan event that is both difficult to predict and tough to attribute to a single factor, President Trump's actions clearly indicate that the charm of the self-styled 'deal maker' could wear really thin if countries from this grouping do not settle, and settle fast. Does India have the resilience to hold fast? On present indications, we believe yes. India's weakness in not having the kind of dominance China has in key supplies means, it will depend on a reaction to the pain caused by the exclusion of China, Canada, or both eventually. But Trump will be needing an excuse to back down soon, and the  sooner he finds one, the better it will be for all the parties involved here.

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