Nifty recovers on hopes of an imminent Ukraine war ceasefire
·
Trump may soon withdraw his threat of a 25%
punishment tariff for Russian oil trade with India if Putin agrees to the
immediate ceasefire
·
But Trump may not cut India’s tariff to 15% unless
India cuts to 0% on US goods with full & free access without any non-tariff
barriers
·
U.S. goods now face ~17.5% MFN tariffs +15% IGST;
i.e., total 32.5% tax in India
·
Against this, Indian goods will also face a 25%
tariff +7.5% average state sales tax; i.e. total 32.5% tax in the US
·
Trump 2.0 is now no longer considering China
decoupling, but trying for strategic derisking; the US needs China for the supply
chain including REEs
·
Trump is also now honeymooning with Pakistan for
its vast untapped REEs and other natural resources in a JV with China
·
China is also the 3rd biggest market for US exports and the biggest
market for various US MNCs
·
Thus, India may not be able to play the anti-China
card with Trump 2.0; also, his friendly relationship with Modi is now no longer
great for various reasons
·
For Trump 2.0, India is now a ‘dead economy’ and
thus has no special geopolitical or trade privilege for India
On August 8, 2025, U.S. President Trump announced
officially that he is scheduled to meet Russian President Vladimir Putin on
August 15, 2025, in Alaska to discuss a potential ceasefire in the ongoing
Russia-Ukraine war. The summit, announced by Trump on Truth Social, marks the
first in-person meeting between the two leaders since Trump’s return to the
White House in January 2025 and Putin’s first U.S. visit in a decade. The talks
aim to address the conflict that began with Russia’s invasion of Ukraine in
February 2022, which has caused tens of thousands of deaths and displaced
millions.
On August 15, 2025, Putin may officially submit his
written proposal for the Ukraine war permanent ceasefire (end) plan,
emphasizing his wish list of taking control of Eastern Ukraine, including
Crimea; no NATO membership of Ukraine; no further NATO expansion in Eastern
Europe, and a security guarantee for Russia from NATO/US. Putin and Trump may
also announce at least a temporary (30 days) Ukraine war ceasefire or only an air
warfare ceasefire. Trump will then officially hand over Putin’s Ukraine
proposal to Zelenskyy and also talk with him and his European/NATO
counterparts. The back-and-forth Ukraine ceasefire talks and final deal should
be completed by September, so that Noble Peace Prize Aspirant Trump may get the
coveted Noble Peace Prize on October 10, 2025. Trump may also claim the Nobel Prize in Economics
for his ‘unique tariff model’ in 2026-27!
Russian asset or sympathizer, Trump may propose
swapping of lands, war prisoners, etc, and ensure 50:50 JV with Russia to
explore/produce/process REEs in Eastern Ukraine, which Putin seeks to control
entirely. The US will provide security assurance to both Russia and Ukraine;
Crimea may officially become Russian territory along with part of East Ukraine
(Donetsk).
Overall, Ukraine has to give Eastern Ukraine to
Russia for the permanent ceasefire/peace deal in return for full NATO
assurance, security, sovereignty, and peace. The NATO/EU/US will recognize
swapped/surrendered Eastern Ukraine to Russia as ‘[De-facto’ or ‘occupied
Eastern Ukraine’ by Russia just like ‘Occupied Kashmir’ or POK (Pakistan
occupied Kashmir) or Akshay Chin (China occupied Kashmir/Ladakh region) to
India or Taiwan to China. Theoretically, Ukraine, the EU, the US, NATO, and
even the UN will not recognize Russia-occupied Eastern Ukraine and continue to
show Eastern Ukraine as a part of Ukraine in their official map, but
practically, it will be a permanent Russian territory. The August 15 summit between Trump and Putin
will be the start of a month-long negotiation process between Russia and
Ukraine/Europe/US to make a deal in line with Trump’s peace proposal involving the
control of Eastern Europe by Russia in the form of Russia-occupied Eastern
Ukraine.
Impact on the
Indian market
Trump threatened 25% additional tariffs on India to
be implemented from August 27, 2025, for trading (purchasing & re-selling
after refining) with Russian oil. This is the top of 25% reciprocal tariffs on
India, already in place from August 7, 2025. Trump accused India of funding
directly/indirectly Russia’s Ukraine war and also indicated China is doing the
same. Both India and China are also trying hard to persuade Russia for the
3-years old bloody Ukraine war; Trump also repeatedly blamed Biden for the war.
Both Xi and Modi talked with Putin personally last week, and after that Putin
may have also agreed to advance the Ukraine ceasefire talks with a formal
30-day proposal. This is exactly what Trump is seeking from Xi and Modi by
pressuring them about ‘secondary sanctions’.
Previously, Trump indicated that he could
reconsider a 25% punishment tariff on India for trading in Russian oil if Putin
presents a formal 30-day ceasefire plan. Thus, Trump may withdraw the 25%
Russian oil punishment tariff on India after the August 15 summit with Putin,
if Putin submits such a formal Ukraine war ceasefire plan. There will be some
back & forth, and dealmaker & Nobel Peace Prize aspirant Trump may
ensure the permanent end of the Ukraine war by September’25 to get the Nobel
Peace Prize on October 10, 2025. In the process of Nobel Peace Prize
nomination, Switzerland may also get a better trade/tariff deal of 15% from
Trump and 0% on Gold vs the present 39%!
But to get 15-20% tariffs from 25%, India has to
lower its tariffs to 0% on US goods from present weighted average ~17%; India
charges 15% IGST on US goods, while the US charges 7.5% sales tax on an average
in various states; the US has no Federal sales tax/VAT/GST. Thus, US goods now
face ~32% total tax in India (weighted average), while Indian goods face 32.5%
total tax in the US. This is Trump’s actual reciprocal tariffs policy. Thus to
get preferential 15-20% US tariffs, India has to lower its tariffs on US goods
to at least 5-10% o9n all items without any sin tariffs/tax including agri/farm
items, something which would be politically tough for any ruling party in the
country as both note (corporates) & vote (farmers/rural/MSMEs) bank will be
affected.
Trump may not pay any heed to India’s go-slow
strategy; he will maintain 25% reciprocal tariffs on India, the highest among
Asean peers, unless India reduces its IGST or tariff rate on US goods
substantially. Higher tariffs on Indian goods may affect not only Indian
merchandise exports to its number one client, the US, but also India’s
corporate profitability and Nifty EPS.
India has initially relied upon ‘unbreakable
friendship’ between Modi and Trump, but that has already been lost during Trump
2.0 election campaign in September-October 2024, when Modi rejected Trump’s
call to join his election campaign. Trump wants Modi’s help to secure Indian
votes after Modi’s active ‘friendship campaign’ during the Trump 1.0 era.
India’s PM Modi may have already done a blunder by intervening in US electoral
politics quite actively during Trump 1.0 to get a ‘good score’ and favors from
Trump 1.0 just before the 2020 COVID and US election. Trump 1.0 was then busy
with the China trade war, and thus, Modi and also Indian corporates tried to
play the anti-China card to keep Trump in a good mood.
In any way, after Trump lost the 2020 re-election
to Biden, Modi also tried his best to be friendly with Biden to get special US
favors, as the US is the biggest source of India’s FX/USD reserve. India earns
almost $95B from US export surplus and remittances, which is around 15% of its
FX reserve. But Biden didn’t do any undue favor for Modi in trade and
geopolitics; on the contrary, he slapped a criminal case against Modi’s close
ally Adanis in the US DOJ.
Fast forward, Modi may have miscalculated Trump’s
winning prospects against Harris during the last phase of the US election
campaign in late 2024, when the unexpected and unimaginable assassination attempt
on Trump during the election campaign helped him to recover the lost ground
along with the US Democrats' political circus over Biden-Harris nominations and
campaigns. Also, Parkinson's disease-like
attitude from Biden, suffering from acute senile dementia, and his stubborn
attitude to run for a 2nd term cost him the 2024 election; for
Harris, it was too late and too little. Tesla and Twitter CEO Musk also played
a pivotal role in Trump’s reelection despite his megalomaniac-like attitude.
Trump may have gotten infuriated after Modi
declined his call/invitation to join his election campaign in late 2024. Now,
after Trump 2.0, Modi/India may have made another strategic blunder by
approaching the Trump admin from day one for a favorable trade deal. Modi also
personally visited Trump in mid-February quite proactively despite being
insulted deliberately by Trump to ignore him for the ‘historic’ inauguration
day; in lieu, Trump invited his close family friend Mukesh Ambani & Family.
Overall, Modi’s preliminary eagerness to meet him
and sending a trade team early to start trade talks-deal maker and businessman,
Trump took it as a sign of weakness/nervousness. Also, India’s go-slow trade
talk strategy and no inclination to open the Indian market fully for US goods
have infuriated him.
Trump 2.0
is now vastly different than Trump 1.0: Does not need India further to curb
China.
Trump now no longer considers complete Chinese
decoupling, which is impractical; Trump now wants strategic de-risking from
China. The Trump admin now sees China as the 2nd strongest
superpower competitor in terms of economy, military, and also tech; it’s a
three-dimensional (3D) game between the US and China. Also, China has REE
leverage and together with the US, controls over 45% of the global economy.
China is also the number three customer for the US
export ~$144B, almost 7% of total US exports after Canada (17%) and Mexico
(16%); India stands at number 12 with only ~$42B. Thus, despite ~1.45B
population and a ‘potential big market’, Tariff Man Trump has no special value
for Tariff King India due to its sky-high tariffs, GSTs and other non-monetary
trade barriers. Moreover, Trump is now ensuring good relations with China,
Russia and even Pakistan to ensure fair access to REEs; like Ukraine, Pakistan also
has a vast reserve of REEs. Trump wants to make an unofficial JV with China and
Russia to control a substantial reserve of REEs without any war (bloodshed).
Trump wants free & fair access to the Indian
consumer market for US goods, something which no Indian political party may
allow for fear of losing both vote and note bank. India’s high tariffs and high
GST are causing a higher cost of living, but India’s politicians and
policymakers are not ready to remove century-old protectionist policies for
political gain.
The need of the hour is to ensure lower borrowing
costs in India along with lower tariffs and GST/VATs and other taxes on all
goods & services, along with structural policy reforms, including the
introduction of modern/mechanized agriculture/farming (PPP mode involving
interested corporates) in India to be globally competitive. India’s GST rates
should be lowered and simplified with no rocket science-like complexity;
maximum four rate slabs with no sin tax structure (20-150-10-5%). The cost of
production and doing business in India should be lowered substantially
including energy and other regulatory/essential costs, so that Indian goods can
compete with foreign players.
Conclusions
Although Trump may soon withdraw his 25% Russian
oil punishment tariff threat if Putin agrees to an immediate Ukraine war
ceasefire, at least for a 30-day temporary truce to pave the way for further
negotiations. But Trump will continue his 25% reciprocal tariff on India. And
until Trump gets a favorable trade deal allowing full & fair access of all
US goods, including agri/farm items, Trump may not sign any BTA and continue to
charge Indian goods at 25% tariff, which will be equivalent to 32.5% total tax
(including US state sales tax 7.5%). Against this, US goods now face ~17.5%
weighted average /MFN tariffs and 15% IGST in India, totaling also 32.5% tax;
i.e., reciprocal on each other. Trump will have no great issue as he sees India
as a ‘dead economy’, can’t afford even cheaper US goods.
Trump’s 25% tariffs are not a bluff but a
high-stakes negotiation tactic. India, with its economic resilience and
strategic importance, is well-positioned to secure a favorable deal,
potentially lowering tariffs to 15–20%. But the challenge lies in balancing
concessions with so-called national interests, protecting agriculture, and
maintaining ties with Russia and BRICS. The 25% U.S. tariff may pose short-term
challenges for India’s economy, with a projected GDP growth reduction of ~0.5%,
rupee depreciation of ~5%, and inflationary pressures (+100 bps) from higher
input costs. Employment in labor-intensive sectors like textiles and auto
components is at risk, with MSMEs facing significant disruption. The potential
higher inflation, higher unemployment, and lower economic growth may bring a
stagflation-like scenario for the Indian economy.
Looking ahead, all focus may now be on Trump’s
attitude, India’s domestic political climate, and the ongoing media trial,
which may affect the progress of BTA talks between India and the US. If there
is no BTA between the US and India with lower tariffs (15-20%) by December
2025, the Indian economy may face serious challenges in 2026 with higher
USDINR, higher imported inflation, a weak labor market, subdued consumer
spending, and lower economic growth.
Although as an export and financials-heavy index,
Nifty earnings may not be affected too much, potentially higher USDINR may not
be good for the overall economy and Dalal Street. Also, prolonged Trump tariff
tantrums will be negative for export-savvy Indian corporates. India is also
vulnerable to US tech dependency and any potential direct/indirect sanctions.
Bottom
line:
At projected 1000 EPS for FY26 and 22 fair PE, the
fair value of Nifty may be around 22000; Nifty may slip to ~22000 by
September-December’25, if there is no meaningful progress on US-India BTA and
an escalation in Trump tantrum, leading to deteriorating diplomatic relation
with the US and subsequent direct/indirect impact on India’s USD inflow
(subdued export, remittances, FDIs, FPIs etc).
Technical outlook: Nifty Future, Bank Nifty Future, and
USDINR
Looking
ahead, whatever may be the narrative, technically Nifty
Future (CMP: 24700) now has to sustain over 24400-24600 for a recovery to
25000/25300*25800/26000* and a further rally to 26100/26300-26400/26500;
otherwise, sustaining below 24340, Nifty Future may fall to 24250/240000-23800 and
23600/23350*-23900/23750 and 23400*/23100-22600/22200 and further 22000-21700*
the coming days.
Technically,
Bank Nifty Future (55500) now has to sustain over 55300-55600 for a recovery to 56800 and 57000/57900
and only after sustaining 58100, may further rally to 58500/58900-60500/61000
and a further 61500-65750 in the coming days; otherwise, sustaining below 55300,
BNF may further fall towards 55000-54900 and 54500/54000-53500/53000 and
52500*-52000/51500 and further 51000/50500-50000/49700 and 49200-47700 in the
coming days.
Technically,
USDINR-I now (87.75) has to sustain over
88.00 for a further rally to 88.50/88.75-89.00/89.50 and
90.00/90.50-91.00/91.50 and 92.50-94.50 in the coming days; otherwise,
sustaining below 87.50-87.00, USDINR may again fall to 86.50/86.00-85.50/;85.00
and 84.00-83.50 in the coming days.
Disclaimer: I
am an NSE-certified Level-2 market professional (Financial Analyst- Fundamental
+ Technical) and not a SEBI/SEC-registered investment advisor. The article is
purely educational and not a proxy for any trading/investment signal/advice. I am a professional analyst, signal provider,
and content writer with over ten years of experience. All views expressed in
the blog are strictly personal and may not align with any organization with, I
may be associated.
If you want to support independent &
professional market analytics, you may contribute to my PayPal A/C: asisjpg@gmail.com
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