CORRECTED-INDIA STOCKS-Indian shares slide on US tariff worries, erase August gains

By Vivek Kumar M

Aug 26 (Reuters) - Indian shares dropped in early trades on Tuesday and erased their gains for August after a U.S. Homeland Security notification confirmed Washington will impose an additional 25% tariff on all Indian-origin goods from Wednesday.

The Nifty 50 .NSEI and the BSE Sensex .BSESN were down about 0.7% each at 24,787 and 81,028.63 points, respectively, as of 10:39 a.m. IST.

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

Fifteen of the 16 major sectors traded lower on the day. The broader mid-caps .NIFMDCP100 and small-caps .NIFSMCP100 declined about 1% each.

Indian exports will face U.S. duties of up to 50% - 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 RELI.NS, the third heaviest-weighted stock on the Nifty 50, fell about 1%.

Heavyweight financials .NIFTYFIN fell 1.1% and pharma stocks .NIPHARM were down 1.4%.

Shares of textile, chemicals and shrimp companies also inched lower as these sectors are expected to be hit the most from U.S. 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 .NIFTYFMCG were up 0.3% on Tuesday, the sole gainer among 16 major sectors.

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