By Eman Nazar Shah
Dalal Street opened in the red in early April 2025 after President Trump announced the first round of new tariffs, unsettling global markets. Early trading saw India’s benchmark indices tumble. At one point, the Sensex, which tracks 30 of India’s largest listed companies was down about 0.5%, while the Nifty 50, a broader index of 50 major firms across sectors, fell roughly 0.6%. Fear ran high: India’s volatility index (VIX), a measure of expected market swings, jumped from around 14 in March to nearly 22, roughly a 60% rise in volatility.
From the tariff announcement onwards, foreign investors withdrew around $16.4 billion from Indian equities in 2025, one of the largest outflows on record. India’s equity market had been particularly reliant on foreign capital amid elevated valuations, making it vulnerable to sudden shifts in global risk sentiment. Concerns that tariffs could disrupt exports, slow global growth and prompt firms to delay investment decisions spread quickly. The sudden chill froze much of the once-heated IPO market as caution took hold among investors.
One clear casualty was the planned IPO of LG Electronics’ India unit. The South Korean parent, a major manufacturer of consumer electronics, filed in December 2024 to list LG India by May 2025, but in late April announced a delay as markets turned jittery. One source stated the deal was “on pause given the market sentiment because of Trump and tariffs”. The target valuation was slashed accordingly: news reports estimated the company’s valuation at around $11 billion, down from about $15 billion earlier. In short, hopes of a record-setting launch were dimmed by the broader trade shock.
Renewable energy firm Vikram Solar saw a similarly muted debut. The company, which manufactures solar panels and exports a significant share of its output to the United States, saw its IPO oversubscribed more than fifty times, meaning investor demand far exceeded the number of shares available. Yet shares listed only about two to three percent above the issue price – well below the 11 to 12 percent pop investors had expected. Analysts say tariff worries played a role, as investors feared higher costs and weaker export competitiveness. Even with strong demand for clean energy, its stock barely budged on the first day of trading, illustrating how macro uncertainty can blunt even a popular issue.
BlueStone Jewellery, an online diamond-and-gold retailer, hit a flat note as well. The company trimmed its IPO size by nearly one fifth, from about ₹10 billion down to ₹8.2 billion, ahead of its mid-August offering. The issue attracted healthy bids and was fully subscribed, but the stock opened almost unchanged from the issue price. Unlike export-oriented firms, BlueStone had less direct exposure to tariffs, but it still suffered from a broader shift in investor sentiment. Before the tariff announcement, consumer-facing IPOs had benefited from optimism around domestic demand and rising incomes. Post announcement, concerns over inflation, discretionary spending and overall market volatility made investors more cautious, leaving little upside for new listings. The once-booming IPO window now looked more like a trickle of quiet debuts.
Analysts and officials say such a chill was to be expected. Goldman Sachs economists estimate that the tariffs could shave roughly 0.3 percentage points off India’s GDP growth in 2025–26, noting that policy uncertainty may prompt firms to defer investments. Raphael Luescher of Vontobel, an asset management firm, warned that sustained high tariffs could weaken India’s manufacturing appeal by discouraging global firms from setting up bases in the country. Others struck a more optimistic note: strategists at DBS Bank argued that strong domestic demand and fiscal support could cushion the blow. While India’s fundamentals remain intact, Washington’s trade actions have unsettled investor confidence.
In response, companies are beginning to adjust. Export-oriented firms are exploring new markets and reworking supply chains, while some are delaying listings until volatility subsides. India’s economy is still expected to outpace many of its peers, but the episode underscored how quickly global political shifts can reshape investor sentiment at home. For India’s equity market, it was a reminder that decisions made far from Dalal Street can still set the tone for tomorrow’s trades. As one banker in Mumbai put it, “What happens in far-off capitals often becomes tomorrow’s ticker news on the Bombay Stock Exchange”.
The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.