Nifty, Sensex See Red — Trump Tariffs, Key Factors Behind Stock Market Fall
Nifty 50 fell as much as 0.80% to 23,145.80 and Sensex was down 809.89 points to 75,807.55.
The Indian stock markets fell on Thursday after US President Donald Trump announced a tariff rate of 26% on imports in the US from India. The markets fell nearly 1%, dragged by information technology and auto shares.
Nifty 50 fell as much as 0.80% to 23,145.80 and Sensex was down 809.89 points to 75,807.55. This comes after the indices posted a positive return on Wednesday, snapping its two-day losing streak.
Volatility index VIX had risen over 0.35% in the early hours of trading.
Trump Tariffs
While speaking at the Rose Garden on 'Liberation Day' on Wednesday, Trump framed the tariffs as part of his broader economic vision to "make America wealthy again".
Trump announced a 10% baseline tariff on all countries with the new tariff policy taking effect starting midnight EST, with effect from April 5. The US imposed sweeping tariffs on multiple trade partners, with rates as high as 49% on Cambodia, 36% on Thailand, and 34% on China.
US also announced a 26% tariff on Indian imports, citing the country's higher tariff rates on American goods. The European Union faces a 20% tariff.
Even allies like Israel (17%) and the UK (10%) aren't exempt. Switzerland faces a 31% tariff, and Vietnam has been marked for a 46% levy. The higher-than-baseline tariffs will take effect from April 9.
Tech Stocks Weigh
The recently announced tariffs are expected to impact the IT demand and also bring down the market sentiment. This uncertainty pulled the Nifty IT down nearly 4%, hitting a fresh nine-month low.
HCL Technologies Ltd. was the worst Nifty performer after it fell 3.36% to Rs 1,517.85 apiece, while Persistent Systems Ltd. was the worst performer in the Nifty IT. Infosys Ltd., Tata Consultancy Services Ltd. and Tech Mahindra Ltd. were also down nearly 3%.
Auto Stocks Take A Hit
NSE Nifty Auto fell the most on Thursday, after a 25% tariff on foreign automakers. The levy stems from his assertion that countries like India, Vietnam, and Thailand impose excessively high tariffs on US goods, thus prompting this retaliatory measure. The tariff is applicable on fully assembled cars immediately.
Shares of Maruti Suzuki India Ltd., Mahindra & Mahindra Ltd., Tata Motors Ltd., Bajaj Auto Ltd., Eicher Motors Ltd., TVS Motor Co., and Hyundai Motor India Ltd. fell in early trade, as investors assessed the impact.
Shares of Bajaj Auto and Tata Motors fell over 2% around market open. Tata Motors' UK-based arm, Jaguar Land Rover, counts the US as a key market.
FIIs Selling Continues
The foreign institutional investors turned net sellers on Wednesday, after a brief buying streak. Overseas investors offloaded equities worth Rs 1,538.88 crore on Wednesday, while domestic institutional investors remained net buyers for the fourth consecutive session and mopped up equities worth Rs 2,808.83 crore.
In March, FPIs offloaded equities worth Rs 3,973 crore on net basis, according to the National Securities Depository Ltd. data. In February, they had offloaded net equities worth Rs 34,574 crore. This was preceded by net selling of Rs 78,027 crore in January.
Global Cues
Global financial markets witnessed a selloff on Thursday after US President Donald Trump's announcement. Tokyo's Nikkei 225 fell over 3.4% but saw some recovery. This comes after Trump imposed 24% reciprocal tariff on Japan, which is considered as one of the closest allies of the country.
South Korea was also hit with a 25% tariff, leading to a 1.9% decline in Kospi soon after its opening. In Australia, the S&P/ASX 200 fell 1.8% to 7,793.10, after US announced reciprocal tariff of 10%.
While Hang Seng fell over 2.7%, Shanghai Composite was down 0.5%. Taiwan futures were also trading 1.6% lower, indicating a lower opening for the benchmark. The Asian financial markets have taken cues from the S&P 500 future that fell 3%, while the Dow Jones Industrial Average was down 2%.
