Nifty, Sensex Extend Decline — Key Factors Behind Stock Market Fall

The Indian stock markets extended their decline for the second day on Friday after US President Donald Trump announced tariffs. The markets fell over 1%, dragged down by metal, pharma and IT shares.

The NSE Nifty 50 ended 345.65 points or 1.49%, lower at 22,904.45 and the BSE Sensex closed 930.67 points or 1.22%, down at 75,364.69. During the session, the Nifty 50 declined 1.62% to the day's low of 22,874.40, and the Sensex fell 1.325% to the day's low of 75,286.29.

The volatility index VIX had risen over 1.18% during the end of the session.

Global financial markets continued to see a selloff on Friday, following US President Donald Trump's announcement on tariffs. Asian shares fell to their lowest levels in two months on Friday.

While Japanese shares fell to their lowest since August, US stocks saw their biggest drop since 2020. S&P 500 fell 4.9% and Nasdaq was down 5.5% on Thursday. The Topix slid as much as 3.7% to 2,473.03 in morning trade in Tokyo, while the blue-chip Nikkei 225 declined as much as 2.8% to 33,770.29.

Equity-index futures for the US and Europe also fell on Friday.

South Korea also held on to losses after a court removed President Yoon Suk Yeol from office, paving the way for a presidential race. This follows the 25% tariff imposed on South Korea by the US.

In Australia, the S&P/ASX 200 fell 1.8%, while Hang Seng was relatively flat and declined 0.1%.

"The higher-than-expected reciprocal tariffs have fuelled recession fears and raised concerns that the steep increase in US tariffs will hurt global economic growth," said Vikas Jain, head of research at Reliance Securities.

Oil extended its sharp drop after OPEC+ unexpectedly increased the supply by three times the planned amount in May. This is the worst rout since 2022.

While Brent crude fell to around $70 per barrel after a 6.4% decline, West Texas Intermediate was below $67.

Currencies from developing countries scored their best day in over two weeks as fears over the damage due to US President Donald Trump's tariff policy bruised the US currency. Meanwhile the dollar’s extended decline in the midst of a global selloff and tumbled the most in at least two decades.

The Bloomberg Dollar Spot Index fell as much as 2.1% on Thursday, the measure’s sharpest intraday decline since its launch in 2005.

The yen jumped 2.7% versus the dollar overnight, to trade at the strongest level since October. The Mexican peso rose as much as 1.8% after the country continued to be exempted from levies on imports in the free-trade agreement.

The Indian rupee appreciated by 46 paise against the US dollar and opened at 85.75 against the greenback and then went to 84.98, the highest level since Dec. 20.

While speaking at the Rose Garden on 'Liberation Day' on Wednesday, 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.

"It is also worrying that there might be more sector specific tariff that might be announced later," said Vineet Agrawal, co-founder, Jiraaf.

Foreign institutional investors stayed net sellers on Thursday for the fourth straight day. Overseas investors offloaded equities worth Rs 2,806 crore on Thursday, while domestic institutional investors remained net buyers for the fifth consecutive session and mopped up equities worth Rs 221.5 crore.

In April so far, FPIs have offloaded equities worth Rs 7,396 crore — higher than the net selling of Rs 3,973 crore recorded in March, according to NSDL data. This follows net equity outflows of Rs 34,574 crore in February and Rs 78,027 crore in January.