Indian stock markets took a sharp hit on Tuesday, with the BSE Sensex and NSE Nifty50 both registering significant losses as global trade tensions escalated following former US President Donald Trump’s latest tariff announcements.
The Sensex opened at 72,817.34, down from its previous close of 73,085.94, and quickly dropped to an intraday low of 72,633.54. By 9.40 am, the benchmark index had declined by 265.30 points to 72,820.64. The Nifty50 index also broke a key psychological support level, falling nearly 150 points to 22,014.45.
Trump Tariffs Trigger Market Sell-Off
The latest wave of selling was driven by Trump’s trade policy, which has unnerved global markets. The US imposed a 25% tariff on Canada and Mexico, and raised duties on Chinese goods to 20%. Market analysts fear these measures could hinder global trade and economic growth.
“Uncertainty unleashed by Trump is aggravating global trade,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “If this tariff policy persists and starts affecting other countries, it will harm global trade and the economy. India will not remain immune.”
He also warned that persistently high inflation in the US might force the Federal Reserve to maintain higher interest rates, potentially leading to a market correction or crash in the US. Such a scenario could further impact emerging markets like India.
IT Stocks Bear the Brunt
Indian IT stocks suffered the most, following a sell-off in US technology shares overnight. Many Indian IT companies rely on the US for business, and a slowdown in the American economy could dampen demand for their services.
The Nifty IT index fell 1.92%, emerging as the biggest sectoral loser. Companies like TCS, Infosys, and Wipro were among the worst performers. Higher tariffs and trade tensions have raised concerns about reduced outsourcing opportunities for Indian firms.
Foreign Investor Outflows Continue
Foreign Institutional Investors (FIIs) have maintained their selling spree, further pressuring Indian markets. Since October, FIIs have withdrawn over $26 billion from Indian equities. On Monday alone, FIIs sold shares worth Rs 47.88 billion ($548.29 million).
The persistent outflow of foreign capital is a key factor in the market downturn. Amid rising global uncertainties, investors are opting for safer assets like US bonds and gold, reducing their exposure to emerging markets like India.
Sectoral Performance: Broad-Based Losses
Most sectoral indices ended in the red, highlighting the widespread sell-off. The Nifty IT index declined 1.92%, Nifty Auto dropped 0.92%, Nifty Pharma slipped 0.90%, Nifty FMCG shed 0.88%, Nifty Media lost 0.64%, and Nifty Metal fell 0.61%.
On the positive side, Nifty PSU Bank rose 0.25%, while Nifty Bank and Nifty Financial Services gained 0.11% and 0.10%, respectively.
Outlook: Patience Is Key
The Indian stock market has struggled for months. The Nifty50 and Sensex are down 16% from their record highs in September. The small and mid-cap segments have also entered a bear market, having fallen over 20% from their peaks.
“Investors should remain patient,” advised Dr Vijayakumar. “There are no immediate signs of a rebound, even though valuations are fair. It is advisable to wait and watch how the global scenario unfolds before making major investment decisions.”
With global trade tensions showing no signs of abating, the road ahead for Dalal Street remains uncertain. Investors will keep a close watch on geopolitical developments and foreign fund flows to gauge market direction in the coming days.
