Indian equities experienced their sharpest single-day decline in nearly four months on January 8, 2025, as concerns over potential US trade sanctions wiped out ₹8 lakh crore in investor wealth. The market selloff was triggered by reports that US President Donald Trump had backed the Sanctioning Russia Act, a bipartisan bill proposing severe tariffs on countries continuing to import Russian oil.

Market Performance Overview

The benchmark indices closed significantly lower, reflecting widespread investor concerns about India's exposure to Russian crude imports.

The India VIX spiked during the session, signaling rising near-term volatility expectations among market participants.

Sectoral Impact and Stock Performance

Public sector units and metal stocks bore the brunt of the selling pressure, with energy-related companies particularly affected given India's significant Russian crude imports.

Selective gainers included ICICI Bank and Dixon Technologies, demonstrating continued buying interest in high-quality domestic consumption stocks.

Oil Import Vulnerability

The proposed Sanctioning Russia Act threatens tariffs of up to 500% on countries importing Russian oil or uranium. India's position as the world's second-largest buyer of discounted Russian crude makes it particularly vulnerable to such measures. Russian crude currently accounts for over 35% of India's oil imports, providing significant cost advantages to domestic refiners.

Analysts indicate that if tariffs are imposed, PSU oil marketing companies would face the most immediate impact. These companies would be forced to purchase non-Russian crude at higher prices while being unable to pass the full cost increase to consumers, resulting in margin compression and under-recoveries.

Expert Analysis and Market Outlook

Market experts suggest the current selloff represents risk pricing rather than operational breakdown. Shailendra Kumar, CIO and co-founder of Nanolia, emphasized that India possesses sufficient refining capacity and can process diverse crude grades. The primary concern centers on the loss of arbitrage benefits from discounted Russian oil rather than supply chain disruptions.

Analysts project that Brent crude prices could rise modestly to $60-75 per barrel range, but consider this manageable rather than catastrophic. The market reaction appears to overprice short-term risks while India's strong macro fundamentals remain intact.

Structural Resilience Factors

Despite immediate concerns, several factors support India's resilience to potential trade disruptions:

• Diversified export base: The US accounts for 18% of India's exports, limiting overall exposure
• Domestic consumption strength: FMCG, banking, and infrastructure sectors remain largely insulated
• Refining capabilities: Indian refiners are structurally positioned to handle various crude grades
• Alternative sourcing: Potential access to discounted Venezuelan crude if sanctions are lifted

Experts anticipate front-loaded volatility in the first quarter, with mid-cap and small-cap stocks potentially correcting 6-7% before stabilizing. Recovery to 15-16% year-on-year gains is projected by April once earnings clarity emerges.

Key Events to Monitor

Several upcoming developments could influence market sentiment and provide clarity on the sanctions framework:

• US Supreme Court/Senate hearings on the Sanctioning Russia Act (expected in February)
• Arrival of new US ambassador to India (January 12)
• India-European trade treaty developments (possible February signing)

Analysts maintain that while markets currently show heightened sensitivity to headlines, India's long-term economic fundamentals and corporate earnings growth prospects remain healthy.

The White House has announced a sweeping withdrawal from international climate and clean energy organizations, marking a significant shift in US global environmental policy. The administration will end funding and withdraw from 66 international organizations, comprising 35 non-United Nations bodies and 31 UN organizations that focus on clean energy and climate change initiatives.

Major Organizations Affected

The withdrawal encompasses several key international bodies working on renewable energy and climate action:

Background and Process

The announcement follows a comprehensive review conducted by the Secretary of State, who reported findings to the White House on all international organizations the US belongs to or funds, as well as treaties and agreements signed by the country. This assessment aimed to identify organizations deemed not in the country's national interest. President Trump has directed all executive departments and agencies to take immediate steps for withdrawal from the listed organizations.

Key Organizations and Their Missions

International Renewable Energy Agency (IRENA) drives the widespread adoption and sustainable use of all forms of renewable energy, including solar, wind energy, bioenergy, geothermal, hydropower, and ocean energy.

International Solar Alliance (ISA), led by India, was conceptualized during COP21 in Paris in 2015. The alliance boasts over 100 signatory countries, with 90+ nations having ratified to become full members. Its mission focuses on unlocking $1.00 trillion in solar investments by 2030 while reducing technology and financing costs.

International Response

Simon Stiell, Executive Secretary at UNFCCC, strongly criticized the decision, stating that "The United States was instrumental in creating the UN Framework Convention on Climate Change and the Paris Agreement, because they are both entirely in its national interests." He characterized the withdrawal as a "colossal own goal," arguing that while all other nations are stepping forward together, this step back from global leadership, climate cooperation and science can only harm the US economy.

Domestic Policy Context

This international withdrawal aligns with the administration's domestic renewable energy policy changes implemented throughout 2025:

In July, Trump signed an executive order directing the Secretary of the Treasury to terminate the clean electricity production and investment tax credits for wind and solar facilities and to implement enhanced foreign entity-of-concern restrictions. In March, the administration announced that solar photovoltaics would no longer qualify under Section 303 of the Defense Production Act.

Weeks after assuming office, Trump issued multiple executive orders aimed at reversing climate and energy policies. One order directed federal agencies to immediately pause the disbursement of funds through the Inflation Reduction Act, which proposed spending millions of dollars to promote clean energy.

Source: https://www.mercomindia.com/trump-withdraws-us-from-global-climate-pacts-solar-alliance-and-irena