Trump recently shared on Truth Social that he plans to raise tariffs on India. This decision comes after India bought a large amount of Russian oil and sold it in the open market. India has been making these deals as the global economy changes. The tariff hike aims to respond to India’s trade with Russian oil.

Impact on Indian Market

The news from Truth Social brings significant uncertainty to Indian assets. The India VIX, which measures market anxiety, rose 12% to 15.5 in early trading, showing this nervousness. This makes strategies like buying long straddles on the Nifty 50 index appealing. The Indian Rupee seems especially at risk. It fell below 85 against the U.S. dollar this morning, a level not seen since the market turbulence in late 2024. Since India’s central bank has been defending the currency, we suggest buying out-of-the-money call options on the USD/INR pair to profit from expected declines. This tariff threat challenges the recent gains in Indian stocks. We recall the market responses during the 2018-2019 trade disputes, when headlines often led to sharp one-day drops in major indices. To protect current long positions, consider using protective puts on the Nifty 50 or Indian-focused ETFs.

Industry Sectors at Risk

Sectors like information technology and pharmaceuticals are particularly vulnerable, as they export heavily to the U.S. In the 2024 fiscal year, these two sectors alone made over $80 billion in exports to the U.S., making them sensitive to new trade barriers. We are exploring bearish option strategies on specific companies in these sectors that generate the most revenue from North America. Additionally, this situation may lead to a temporary rise in oil prices. India has been importing Russian crude at a record pace, reaching 2.3 million barrels per day in May 2025, and exporting refined products. Any disruption to this major trade flow could tighten global supply, making calls on WTI or Brent crude futures an intriguing, though contrarian, option amidst the fallout. Create your live VT Markets account and start trading now.

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