Export-oriented stocks traded with mixed performance as investors awaited a pivotal US Supreme Court ruling on Trump's authority to impose tariffs using emergency powers. The case will determine whether Trump can invoke the International Emergency Economic Powers Act (IEEPA) to levy tariffs without congressional approval, with over $150 billion in potential refunds hanging in the balance for importers.

Stock Performance and Market Movement

Export-focused companies showed varied trading patterns, reflecting investor uncertainty ahead of the ruling:

Gokaldas Exports emerged as a key focus, with over 60% of its revenue derived from the US market. Despite the day's gains, the stock remains significantly down over the past year, reflecting broader challenges facing export-oriented companies.

Supreme Court Case and Financial Implications

The Supreme Court case carries substantial financial implications, with over 900 lawsuits filed by businesses seeking tariff refunds. During arguments in November, justices indicated skepticism over Trump's authority to impose such duties unilaterally. The ruling could potentially unlock $150 billion in refunds from the US government for duties already paid by importers.

Analyst Perspectives and Market Outlook

Market experts expressed cautious optimism while highlighting potential limitations. Ajit Mishra, Senior Vice-President (Research) at Religare Broking, noted that export-oriented stocks had seen a recent rebound on expectations of Supreme Court relief. However, he emphasized the need for tempered expectations, stating that the US government has planned alternative legislative measures to maintain or raise tariffs even if the court rules against Trump's current approach.

Recent Tariff Developments

These export stocks have experienced heightened volatility following recent policy developments. Trump raised tariffs on Indian imports to 50% citing India's purchase of Russian oil. Additionally, Trump approved moving forward with a bipartisan sanctions bill proposing a 500% tariff on countries continuing business with Russia, including India, China, and Brazil.

The combination of existing tariff pressures and potential new sanctions has created an uncertain environment for Indian exporters, particularly those with significant US market exposure. Companies across textiles, food processing, and manufacturing sectors continue to navigate this challenging landscape while awaiting clarity from the Supreme Court ruling.

Export-oriented stocks extended their decline for a second consecutive session on Friday, with several companies experiencing significant losses up to 11% following fresh political developments from the United States that have rekindled fears of substantially higher trade barriers.

Political Developments Drive Market Concerns

The selling pressure intensified after US Senator Lindsey Graham announced that Trump had approved a bipartisan Russia sanctions bill. This legislation proposes duties of at least 500% on Russian imports and could potentially be used to pressure countries, including India, that continue to purchase Russian oil. The announcement has created uncertainty among investors regarding potential impacts on Indian exporters.

Seafood Exporters Face Significant Pressure

Seafood exporters were among the worst performers during the trading session, reflecting concerns about direct disruption to shipments to the US, which represents the most important market for Indian shrimp exporters.

Textile Sector Under Significant Strain

Textile exporters came under considerable pressure as investors priced in the risk of weaker US demand and higher landed costs in the event of punitive tariffs being implemented.

Existing Tariff Structure and Future Concerns

The market concerns were amplified by earlier warnings from Trump that Indian exports could face higher tariffs if New Delhi does not address US concerns over its purchases of Russian crude oil. Currently, the US has already imposed tariffs of up to 50% on certain Indian products, with approximately half of that burden directly linked to India's Russian oil imports.

Industry Impact Assessment

According to a recent Crisil report, India's home textile manufacturers could face a 5-10% decline in revenue during the current fiscal year following the US imposition of 50% tariffs. This impact is particularly significant as exports to the US contribute nearly three-fourths of the industry's total revenue.

Crisil expects industry-wide operating profitability to contract by 200-250 basis points during the current fiscal year. This contraction will reduce cash accruals and weaken overall credit metrics. The pressure is expected to be more acute for companies with heavy reliance on the US market.