Sensex and Nifty Decline Amid US Tariff Concerns

Indian Equity Markets Continue to Struggle as Global Trade Tensions Escalate

Mumbai, March 4, 2025 – Indian stock markets extended their losing streak on Monday as investor sentiment remained weak due to rising global trade tensions and foreign fund outflows. The Sensex closed 96 points lower at 72,989, while the Nifty fell 36 points to settle at 22,082, marking its tenth consecutive losing session, the longest since the index’s inception.

Broader market trends were mixed, with the BSE Smallcap index rising over 1%, while the BSE Midcap index ended flat, indicating selective buying in certain segments.

US Tariffs Fuel Market Volatility

The decline in Indian equities was triggered by the United States imposing fresh tariffs on key trade partners:

• 25% tariff on imports from Canada and Mexico
• An additional 10% duty on Chinese goods, raising the total duty to 20%
• Retaliatory tariffs expected from April 2, 2025, adding to fears of a worsening trade war

These developments have raised global economic concerns, with investors worried about potential disruptions in global supply chains and inflationary pressures in the US. Analysts warn that this could prompt the Federal Reserve to maintain higher interest rates for an extended period, further dampening foreign investment in emerging markets like India.

Technical Analysis: Key Support Levels for Nifty

Ajit Mishra, Senior Vice President of Research at Religare Broking, emphasized that the 21,800-22,000 range is a crucial support zone for Nifty.

“The global uncertainty, coupled with relentless selling by foreign investors, has put significant downward pressure on Indian equities. Unless there is a clear signal of stabilization in global markets, we may see further downside risks,” he said.

According to analysts, if Nifty fails to hold above 21,800, the next major support level will be 21,500, where buying interest might emerge.

Sectoral Performance: Auto, IT, and FMCG Stocks Drag Markets Lower

Out of the 13 Nifty sectoral indices, five closed in the red, with IT, auto, and FMCG stocks leading the losses.

• IT stocks declined nearly 1%, with major players like Infosys and HCLTech witnessing selling pressure due to concerns over US inflation and potential slowdown in tech spending.
• Auto stocks saw a sharp correction, with Bajaj Auto, Hero MotoCorp, and Eicher Motors falling between 2-5% on weak demand outlook and cost pressures.
• FMCG stocks traded lower, as inflationary trends and weak consumer sentiment impacted investor confidence.

Top Gainers and Losers

Nifty 50 Biggest Losers:

• Bajaj Auto (-5%)
• Hero MotoCorp (-4.2%)
• HCLTech (-3.8%)
• Bajaj Finserv (-3.5%)
• Eicher Motors (-2.7%)

Nifty 50 Biggest Gainers:

• BPCL (+3.2%)
• SBI (+3%)
• BEL (+2.8%)
• Shriram Finance (+2.1%)
• Adani Enterprises (+1.9%)

SBI Surges on Brokerage Upgrade

State Bank of India (SBI) jumped 3% after global brokerage firm Citi upgraded the stock from ‘sell’ to ‘buy’. Citi also raised SBI’s target price from ₹720 to ₹830, citing:

• Strong loan growth outlook
• Improved asset quality and lower non-performing assets (NPAs)
• Stable net interest margins (NIMs) amid rising deposit growth

The upgrade reflects positive fundamentals for India’s largest public-sector bank, despite broader market weakness.

Midcap and Smallcap Stocks Show Resilience

While the BSE Midcap index ended flat, the BSE Smallcap index rose over 1%, indicating selective buying in quality stocks.

Abhishek Jaiswal, Fund Manager at Finavenue, noted:
“The correction in small and midcap stocks has largely been due to profit booking after a strong rally. However, fundamentally strong midcap companies continue to attract investor interest amid India’s economic growth and policy reforms.”

Stock-Specific Highlights

• ASK Automotive surged 5% after announcing a strategic partnership with Japan’s Kyushu Yanagawa Seiki for manufacturing high-pressure die-cast alloy wheels.
• HBL Engineering gained over 3% after securing a ₹148 crore Letter of Award (LoA) from the Bhopal Division of West Central Railway.
• Gensol Engineering plummeted 20% after CARE Ratings downgraded its long-term and short-term bank facilities, citing financial instability concerns.

Foreign Investors Remain Net Sellers

Foreign Institutional Investors (FIIs) continued their selling spree, offloading Indian equities worth ₹4,788 crore on Monday. In contrast, Domestic Institutional Investors (DIIs) remained net buyers, purchasing stocks worth ₹8,553 crore, providing some stability to the markets.

The sharp outflow from FIIs has been driven by:

• Strengthening US dollar and higher bond yields
• Concerns over prolonged high interest rates by the US Fed
• Weak global risk appetite due to trade war fears

Market Outlook: Uncertainty to Persist in the Short Term

As global markets remain volatile, Indian investors should brace for continued fluctuations in the near term. Experts suggest that:

• Key support levels: Nifty 21,800-22,000 will be crucial in determining the market’s next move.
• Global factors: Investors should track US trade policy developments and interest rate outlook for cues.
• Sector rotation: Defensive sectors like pharma and consumer durables may see increased investor interest amid uncertainty.

With the Q4 earnings season approaching, market participants are advised to focus on stocks with strong fundamentals and adopt a long-term investment approach instead of reacting to short-term volatility.