Title: Who shakes the Indian stock market more: the USA or China's trade policy uncertainty? a sectoral-level analysis

Authors: Muhammadriyaj Faniband; Seema Singh

Addresses: Symbiosis Centre for Corporate Education, Pune, Symbiosis International (Deemed University), Pune – 411016, India ' Symbiosis Centre for Corporate Education, Pune, Symbiosis International (Deemed University), Pune – 411016, India

Abstract: This study investigates the asymmetric effects of USA and China trade policy uncertainty (TPU) on Indian stock market indices using a quantile regression approach and monthly data ranging from April 2005 to May 2025. We cover 16 indices including 13 sectoral and 3 market capitalisation-based indices. The results reveal substantial heterogeneity in how different indices respond to TPU originating from the USA vs. China. USA TPU significantly impacts several Indian sectors, with negative and statistically significant effects observed for chemicals, financial services, fast moving consumer goods fast moving consumer goods (FMCG) and energy sectors. In contrast, the effects of China TPU are largely insignificant across most sectors, with notable exceptions being the chemicals sector and large-cap. The findings underscore the dominance of USA policy shocks in shaping stock returns in emerging markets like India. The study offers critical insights for policymakers and investors, navigating cross-border trade uncertainty in a volatile global environment.

Keywords: TPU; trade policy uncertainty; USA trade policy; China trade policy; Indian stock market; quantile regression; asymmetric effects; sectoral indices; market capitalisation.

DOI: 10.1504/IJTGM.2025.150072

International Journal of Trade and Global Markets, 2025 Vol.21 No.5, pp.560 - 580

Received: 15 Jul 2025
Accepted: 30 Aug 2025
Published online: 28 Nov 2025 *

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