Indian shares dropped in early trades on Tuesday and erased their gains for August after a US Homeland Security notification confirmed Washington will impose an additional 25 per cent tariff on all Indian-origin goods from Wednesday.

The Nifty 50 and the BSE Sensex were down about 0.7pc each at 24,787 and 81,028.63 points, respectively, as of 10:39am IST (10:09am PKT).

The benchmarks traded little changed for the month, on top of a nearly 3pc drop in July.

Fifteen of the 16 major sectors traded lower on the day. The broader mid-caps and small-caps declined about 1pc each.

Indian exports will face US duties of up to 50pc — among the highest imposed by Washington — after President Donald Trump announced extra tariffs as a punishment for New Delhi’s increased purchases of Russian oil earlier in August.

“While this is sentimentally negative for the market, we do not expect deeper correction from hereon as it is not shocking news,” said Pankaj Pandey, head of retail research at ICICI Securities.

Reliance Industries, the heaviest-weighted stock on the Nifty 50, fell about 1pc. Heavyweight financials fell 1.1pc and pharma stocks were down 1.4pc.

Shares of textile, chemicals and shrimp companies also inched lower as these sectors are expected to be hit the most from US tariffs.

“We are likely to see a sector/stock specific market going ahead as export-oriented stocks may remain under pressure due to tariff overhang, while domestic themes could gain traction on consumption boost,” Pandey said.

Consumer stocks were up 0.3pc on Tuesday, the sole gainer among 16 major sectors.

Among other stocks, telecom operator Vodafone Idea slumped 10pc as multiple reports said the government was not considering additional relief on pending dues.