What happened

Shares of Ebix (EBIX -28.52%) fell as much as 20.5% on Monday before climbing back to an 11.5% decline as of 1 p.m. EDT. The supplier of cloud-based services to financial and insurance businesses would be the first to tell you that this plunge wasn't based on any real news.

So what

In fact, Ebix published a press release to that effect. There's no need to quote any part of that release, because the title says it all: "Ebix Is Not Aware of Any News, Events or Tariffs that Would Negatively Impact its Business or Account for Today's Abnormal Trading Activity."

Stepping back in time, the big drop followed when market news aggregator Benzinga published a headline-only article of its own regarding Ebix: "Ebix Shares Down 15%; Traders Attributing Downside To News Of Retaliatory Tariffs Imposed By India On US; Co. Sales From India Were ~40% In 2018."

A yellow charting arrow crashing downward.

Image source: Getty Images.

Now what

It is true that India will levy tariffs on 28 American products in response to financial saber-rattling by the Trump administration. That move hit the newswires over the weekend, so it would make sense to see Indian companies who do a lot of border-crossing business suffer from the tariff threat. Moreover, Ebix really did collect about 40% of last year's revenue from the Indian market.

However, the services Ebix sells in India are based in Indian data centers and managed by local employees. Tariffs only apply to goods and services that are made or provisioned in one country and sold into a different national territory. That's not the case here, so Ebix appears to be unaffected by tariff threats in India.

A company spokesperson told reporters from The Fly that the whole idea "makes no sense. [...] A tariff would apply to something being imported into India and Ebix really does not do that."

It's easy to see how the large slice of India-based revenue and invested capital could confuse some traders when there's bad mojo in the air regarding Indian-American trade practices. In this particular instance, however, the knee-jerk reaction looks misguided.