Nifty Pharma index tanks over 3% on Trump’s 25% tariff threat; Aurobindo Pharma top loser

Stock Market Today: Indian pharma stocks faced significant selling pressure in today’s session, February 19, after U.S. President Donald Trump announced that he would impose duties on pharmaceutical imports, expanding his ongoing trade protectionist measures to major industries.

Indian pharma stocks were already reeling under pressure due to weak performance in the December quarter, and rich valuations in some stocks had led to profit booking. With the latest tariff threats from the U.S., analysts believe that the pain in these stocks will continue until clarity emerges on the tariffs on pharma imports.

Nineteen out of 20 constituents of the Nifty Pharma index traded in the red, with Aurobindo Pharma and Lupin emerging as the top losers, plunging 6.2% and 4.5%, respectively. The index dropped 3.2% in early trade, hitting the day’s low of 20,299.

Proposes 25% tariffs on pharma imports

Trump, on Tuesday, stated that he intends to impose auto tariffs “in the neighbourhood of 25%” and similar duties on semiconductors and pharmaceutical imports. Speaking to reporters at his Mar-a-Lago estate in Florida on Tuesday, he mentioned that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at “25% or higher,” increasing substantially over the course of a year.

However, he did not provide a timeline for implementing these duties, stating that he wanted to give drug and chip manufacturers time to set up U.S. factories to avoid tariffs.

Trump added that he expects some of the world’s largest companies to announce new investments in the United States in the coming weeks.

Since assuming office, Trump has been actively pushing his “Make America Great Again” agenda, focusing on protecting American businesses and citizens. His policies have prioritized strengthening domestic manufacturing, reducing reliance on foreign imports, and enforcing stricter trade practices to safeguard American industries.

Trump has imposed a 10% tariff on Chinese imports, announced and later delayed 25% tariffs on goods from Mexico and non-energy imports from Canada, set a date for 25% tariffs on imported steel and aluminum, and is planning reciprocal tariffs on all countries that tax U.S. imports.

The series of tariff announcements by Trump, aimed at protecting American industries and closing the trade gap with other nations, has made investors jittery about global trade prospects, the potential for retaliatory actions, and the risk of slower economic growth, along with heightened inflationary pressures.

His trade actions are also fueling a rally in U.S. Treasury yields, attracting overseas investors toward safer investments and prompting them to move away from riskier assets such as equities.

38% of India’s drug exports head to the US

Dr Ravi Singh, SVP, Retail at Religare Broking, said, “On Tuesday, US President Donald Trump announced plans to impose 25% tariffs on imported automobiles, semiconductor chips, and pharmaceuticals, significantly impacting global trade. Due to this, the Nifty Pharma Index fell around 3% today and marked a new low at 20300.”

“Trump believes that this initiative will boost domestic manufacturing. Following the declaration, the government of India has called a bilateral meeting with the administration in Washington D.C. to discuss the trade further with the U.S. According to research, India only exports 0.2% of cars to the U.S., but the projected tariff will severely affect the drugmakers in India as drugs export around 38% to the U.S,” he added. 

(With inputs from Reuters)

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.