India’s stock benchmarks recorded their steepest fall in more than four months after fresh signals from Washington raised the prospect of punitive US tariffs on countries continuing to trade in Russian petroleum products.

The sell-off followed remarks by US Senator Lindsey Graham, who said President Donald Trump has approved a bipartisan Russian sanctions bill that could be used as leverage against India, China and Brazil. The proposed Sanctioning Russia Act, 2025 would impose tariffs of at least 500% on countries engaged in trade involving Russian-origin uranium or petroleum products. While the bill is yet to be passed, Graham said it could be taken up for a bipartisan vote early next week.

Market sentiment was further hit after Trump signed a memorandum withdrawing the United States from several international organisations deemed contrary to US interests, including the India-led International Solar Alliance and 31 United Nations entities.

India has not officially responded to the proposed tariffs. Earlier this week, Trump said Prime Minister Narendra Modi was unhappy with the existing 50% tariff imposed over India’s purchase of Russian oil, and noted that New Delhi had raised concerns over delays in receiving US military hardware.

Adding to the uncertainty, US Commerce Secretary Howard Lutnick said in a podcast that a potential trade deal to roll back or avoid tariffs on Indian exports failed to materialise, claiming India was given multiple deadlines last year, according to Bloomberg News.

On the markets, benchmark indices extended losses on Thursday. The Nifty 50 and Sensex fell 1.7% and 1.8% respectively over the week, marking their worst performance in over four months, Reuters reported. Foreign investors have sold shares worth about $900 million so far in January.

Oil and gas stocks were the worst hit, declining 2.8% in their sharpest fall in nine months. Reliance Industries dropped 2.2% after the company said it had not received Russian crude at its Jamnagar refinery through most of December and does not expect supplies in January.

Meanwhile, The Hindu reported that US ambassador-designate Sergio Gor is expected to visit New Delhi this weekend, with discussions likely to focus on a complete halt to Indian oil imports from Russia, amid indications that such imports have already been reduced.

BOB Post