Indian equity markets saw a sharp fall today with the benchmark indices like the Sensex and the Nifty 50 closing sharply lower amid a torrent of negative domestic as well as global factors. The BSE Sensex declined by 765.47 points, closing the day at 79,857.79, and the NSE Nifty 50 fell 232.85 points to close below the 24,400 level at 24,363.30. The Nifty Next 50 index also witnessed considerable losses, dropping around 1.24%, as a reflection of widespread selling pressure in various market segments.
The Tariff-fuel
The market downturn was fuelled primarily on the back of growing trade tensions with America. US President Donald Trump doubled Indian export tariffs from 25% to an astonishing 50% targeting significant sectors like gems and jewellery, apparels, textiles, and chemicals. The tariff increase was a retaliatory action related to India’s ongoing purchases of Russian oil, which the US administration perceives as undermining its sanctions. The tariffs can potentially severely affect India’s $87 billion export machinery to the US, which accounts for 2.5%of India’s GDP. Experts opine that it may lead to a significant fall in the export competitiveness of India, particularly vis-a-vis regional competitors, and can also reduce GDP growth from an initial estimate of 7% to closer to 6%.
Mixed Q1 results
The tariff shock added to already subdued investor sentiment following muted first-quarter corporate earnings. A string of large stocks showed poor earnings, with sectoral pressure being reflected in metal, realty, auto, and financial stocks. For example, government-owned Bharat Heavy Electricals Limited (BHEL) posted a quarterly loss, which caused its shares to fall 5%. Meanwhile, pockets of the market demonstrated resilience with stocks such as Titan Company and NTPC being among the leading gainers, charged by improved business prospects and margin management.
Rupee falling, FII selling
Foreign institutional investor (FII) outflows seem to continue to compound market weakness, and the Indian rupee regularly falling against the US dollar to close at about 87.62, reaching near record lows for the year. The rupee’s fall mirrors general dollar strength as well as increased trade tension that collectively drive up import prices as well as domestic inflationary pressures.
Export-oriented businesses bled the most
Sector-wise, export-based and commodity-linked industries suffered the most during the selloff. Nifty Metal, Realty, and Defence indices fell more than 1 to 1.5%, with big drags in the Nifty 50 being Adani Enterprises, Bharti Airtel, Tata Motors, and IndusInd Bank, all falling between 2-3%. On the other hand, sectors such as Oil & Gas and Media registered marginal gains, but the overall market sentiment was still cautious and bearish.
Also Read: Nifty, Sensex Drop Nearly 1% After Trump Doubles India Tariffs
Hope of stimulus from good Q1s
The downward movement of the market represented the sixth straight weekly decline for benchmarks, reflecting the persistence of a tough environment created by external shocks and internal frailties. Market participants will be paying close attention to future Q1 results, the direction of trade negotiations, the rupee’s performance, and worldwide developments for indications of stabilisation or further instability.
Overall, the Indian markets on Friday showed a convergence of challenges- tariff hikes impacting exporters, low corporate earnings, a weakening rupee, and continued foreign selling, causing sharp falls across major indices and sectors amidst rising uncertainty and muted investor sentiment.
