Indian shares fall on IT losses, US-China tariff woes; Sept inflation data in focus

By Bharath Rajeswaran and Vivek Kumar M

Indian shares inched lower on Monday, weighed down by IT stocks and tracking losses in Asia after the United States issued fresh tariff threats against China, while investors awaited domestic retail inflation data for September.

The Nifty 50 NIFTY was down 0.23% at 25,227.35, while the BSE Sensex SENSEX declined 0.21% to 82,327.05. The broader small-caps CNXSMALLCAP dropped 0.2% and mid-caps CNXMIDCAP added 0.1%.

Other Asian markets (.MIAPJ0000PUS) fell 1.2% after U.S. President Donald Trump threatened to sharply hike tariffs on China in a reprisal against its curb on critical mineral exports.

However, reports of India and the U.S. sticking to a fall 2025 deadline for the first part of a trade deal between the countries helped limit losses on the benchmarks.

Renewed U.S.-China tensions have raised fears of higher inflation and interest rates in the United States. Elevated U.S. yields typically strain emerging markets like India by pulling global capital towards the dollar and U.S. Treasuries.

"Trump's tariff threat on China has rattled global equity markets," said Kranthi Bathini, director of equity strategy at WealthMills Securities.

"With the two economies so closely tied, even small flare-ups can trigger sharp market reactions. Some foreign flows may shift towards India, but the market's direction will hinge on India–U.S. trade talks and the ongoing earnings season."

Among sectors, IT companies CNXIT, which earn a major share of their revenue from the U.S. and could face the brunt of a growth slowdown there, fell 0.8% ahead of HCLTech's HCLTECH earnings post market hours. The stock closed little changed.

Investors now await domestic September inflation data. Economists in a Reuters poll expect inflation to have eased to 1.7%, below the central bank's 2%–6% target, helped by softening food prices.

Separately, Tata Capital 8855TCAPS27.N7 listed 1.23% above its issue price, closing 1.4% higher in its debut session.