- US Supreme Court strikes down Trump’s ‘Liberation Day’ tariffs, sending shockwaves through Indian markets.
- Nifty 50 climbs 0.5% while PSU banks extend a three‑day bull run.
- IT index tumbles 1.4%; capital goods and metals rally on tariff‑relief optimism.
- Blue Jet Healthcare spikes 10% – a micro‑cap breakout worth a second look.
- Fraud scare at IDFC First Bank drags the stock 16% lower, testing risk‑off sentiment.
You missed the market‑moving catalyst that could reshape Indian equities this week.
The Indian equity market closed higher on February 23, with the Nifty 50 up 0.52% to 25,703 and the Sensex up 0.56% to 83,276. The rally was not a random bounce; it was a direct reaction to a 6‑3 decision by the US Supreme Court that invalidated the import levies announced by former President Donald Trump in April 2025. While the Court’s ruling removed the immediate threat of a 10‑15% tariff hike on US imports, the lingering uncertainty over future tariff policy has injected both optimism and caution into Indian trading floors.
Why the Supreme Court Ruling Sends Shockwaves Through Indian Equities
Tariffs are essentially taxes on imported goods. When a major economy like the United States threatens higher tariffs, import‑dependent exporters in India face margin compression, and foreign‑currency earnings can be hit. The Court’s decision lifted the specter of an abrupt cost increase for Indian firms that rely on US raw materials or sell into the US market, prompting investors to reprice risk. Historically, similar trade‑policy shocks have produced sharp, short‑term rallies followed by a period of consolidation. For example, in late 2018 when the US announced Section 301 tariffs on steel and aluminium, Indian steel makers initially rallied on the expectation of protective measures at home, only to see volatility return once the tariff regime settled. The current scenario mirrors that pattern, but the upside is broader because the ruling affects multiple sectors, not just metal manufacturers.
Sector Deep Dive: PSU Banks vs IT – Winners and Losers
The PSU (Public Sector Undertaking) bank index led the charge, gaining 1.36% for a third consecutive day and touching a fresh record high during intraday trading. State‑run lenders such as Indian Bank and City Union Bank benefited from a flight‑to‑quality mindset, as investors seek stable earnings in a backdrop of trade‑policy uncertainty.
In stark contrast, the Nifty IT index slumped 1.42%. IT firms, which earn a sizable share of revenue in foreign currency, are sensitive to any hint of a US‑centric trade escalation. The market is pricing in a potential slowdown in US tech spending if tariff pressures persist. Companies like Hexaware Technologies, Coforge, and Newgen saw declines between 3% and 4%. Competitor analysis shows that private‑sector banks and large conglomerates such as Tata and Adani remained largely flat, indicating that the tariff shock is currently a sector‑specific narrative rather than a market‑wide sell‑off. Their diversified revenue streams and lower exposure to US import tariffs insulate them from immediate fallout.
What the Tariff Tug‑of‑War Means for Capital Goods and Metals
Capital goods stocks rallied robustly, with Kalpataru Projects, Elgi Equipments, Cummins India, and Siemens each jumping between 3% and 4.5%. The logic is simple: lower US tariffs reduce input‑cost pressure on machinery manufacturers that import components from the United States. A similar uplift was observed in the metals space, where Jindal Stainless surged 4.45%. For investors, this creates a tactical entry point. The sector’s price‑to‑earnings multiples remain below the historical average, offering upside potential if the tariff‑relief narrative sustains. However, be mindful of the “stop‑loss” risk – any reversal in US trade policy could quickly reverse sentiment. Technical note: a “record high” in the PSU gauge indicates that the index breached its previous all‑time peak on an intraday basis, a bullish technical signal suggesting strong buying momentum.
Investor Playbook: Bull and Bear Scenarios After the Ruling
Bull case: The Supreme Court’s decision holds, and the US refrains from imposing the 15% tariff. Indian exporters enjoy stable margins, capital goods and metals continue their rally, and PSU banks attract safe‑haven inflows. In this environment, allocate a core position to PSU banks (30% of equity allocation), supplement with a 20% tilt toward capital goods and a 15% exposure to high‑quality IT exporters that have hedged currency risk.
Bear case: Washington announces a new round of tariffs despite the Court’s ruling, or the US Congress enacts retroactive duties. Risk‑off sentiment spikes, IT and export‑oriented stocks plunge further, and fraud concerns at IDFC First Bank trigger broader banking sector scrutiny. Defensive positioning becomes key – increase cash, shift to consumer staples like FMCG (already up 0.70%), and consider short‑term hedges on vulnerable exporters.
In the micro‑cap arena, Blue Jet Healthcare’s 10% surge and Aegis Vopak Terminal’s 8.7% gain highlight opportunistic trades on volume spikes. While these stocks can deliver outsized returns, they also carry heightened volatility; limit exposure to no more than 5% of the portfolio. Overall, the market’s reaction to the Supreme Court ruling underscores how geopolitical and judicial events can instantaneously reshape risk premiums. By aligning sector exposure with the emerging trade narrative, you can capture upside while preserving capital against a potential policy reversal.