Indian benchmarks erase losses as hopes of US-Russia talks arrest tariff-led slide

MUMBAI, Aug 7 (Reuters): India's stock benchmarks erased intraday losses to settle flat on Thursday, as news of a US-Russia presidential meeting helped markets rebound from a slide sparked by the US doubling tariffs on Indian goods.
The Nifty 50 and Sensex dropped nearly 1 per cent intraday, hitting their lowest since May.
The Nifty, however, closed 0.09 per cent higher at 24,596.15 points and the Sensex gained 0.1 per cent to 80,623.26.
The benchmarks recovered after the announcement of a meeting between Russian President Putin and US President Trump in the coming days, which analysts say will soften Washington's stance on India's imports of Russian oil.
The broader small- and mid-caps rose 0.2 per cent and 0.3 per cent respectively.
On Wednesday, Trump imposed an additional 25 per cent tariff on Indian goods over the 25 per cent duty announced earlier, citing New Delhi's continued buying of Russian oil.
"The prima facie imposition of a combined 50 per cent tariff on Indian exports is negative for markets and for investor sentiment, including foreign institutional investors," said Peeyush Mittal, portfolio manager at Matthews Asia.
Foreign portfolio investors have sold Indian shares worth $900 million so far in August, following $2 billion in outflows in July amid trade uncertainty and weak corporate earnings.
Still, expectations of a resolution before the new tariffs take effect on August 27 and the news of US-Russia presidential talks helped markets recover from the day's losses, three analysts said.
Energy and oil & gas indexes, which lost about 1 per cent each during the session, dragged by Reliance and oil-marketing companies on fears of rising costs if Russian oil supplies are disrupted, pared most of their losses to close about 0.2 per cent lower.
IT and pharma stocks, which have high exposure to the US economy, also rebounded from intraday declines and rose 0.9 per cent and 0.8 per cent, respectively.
Among individual stocks, Hero MotoCorp jumped 4.2 per cent after reporting a quarterly profit beat.