Indian Stock Markets Face a Sharp Decline After Seven-Session Rally
The Indian stock market retreated sharply on Wednesday, snapping a seven-session rally as investors opted for profit booking amid growing concerns over US tariff policies. The Sensex dropped by 398.06 points to hit an intraday low of 77,619.13, while the Nifty declined below the crucial 23,600 mark, hitting a session low of 23,572.
Despite opening on a strong note, the indices came under selling pressure, primarily due to uncertainty over the US government’s proposed trade restrictions and a weakening Indian rupee.
Market Performance and Key Indices Movement
Sensex and Nifty Reverse Early Gains
The BSE Sensex initially gained 150.68 points, reaching 78,167.87 before erasing all gains and closing sharply lower.
The NSE Nifty also experienced intraday volatility, briefly rising to 23,736.50, before falling below 23,600 due to increased selling pressure.
Broader market indices, including the Nifty Midcap 100 and Nifty Smallcap 100, saw moderate declines, reflecting cautious sentiment among investors.
Heavyweight Stocks Drag Indices Lower
Among the biggest losers in Wednesday’s session were:
Tech Mahindra
NTPC
Cipla
Axis Bank
Dr Reddy’s Laboratories
US Tariff Concerns Weigh on Global and Domestic Markets
Uncertainty Over Trade Policies Sparks Volatility
One of the primary reasons for the decline in Indian equities was growing uncertainty regarding US trade policies.
US President Donald Trump has promised a sweeping tariff announcement on April 2, which he referred to as a “Liberation Day” against trading partners accused of unfair practices.
Trump stated that “there will be some exceptions, but not too many,” fueling speculation about potential tariff hikes on exports from key global economies, including India.
Sectors with significant exposure to US markets, such as IT, pharmaceuticals, and manufacturing, saw increased selling pressure amid fears of protectionist measures.
Global Markets React to Protectionist Measures
The uncertainty over US trade policies triggered a cautious stance among global investors, leading to weakness in Asian and European markets.
Wall Street indices saw increased volatility in overnight trading, adding to the bearish sentiment in Indian markets.
Emerging market currencies, including the Indian rupee, also felt the impact, as investors sought safe-haven assets like the US dollar and gold.
Profit Booking Adds to Market Weakness
Investors Lock in Gains After Strong Rally
Indian equity markets had witnessed a strong rally over the past seven sessions, with benchmark indices reaching record highs.
As a result, investors opted for profit booking, particularly in large-cap stocks, which had seen significant gains in the previous weeks.
“The market is witnessing profit booking at higher levels after a strong uptrend. However, the overall short-term structure remains positive,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.
While long-term fundamentals remain intact, short-term market corrections are expected due to overbought conditions.
Rupee Weakness Contributes to Market Decline
Indian Rupee Falls Against the US Dollar
The Indian rupee depreciated by 6 paise to 85.78 against the US dollar in early trade, weighed down by:
Weak domestic equities
Strengthening US dollar
Increased month-end dollar demand from importers
On Tuesday, the rupee ended its seven-session winning streak, closing 11 paise lower at 85.72 per dollar.
Liquidity Constraints and External Pressures Affect Forex Market
Forex dealers cited liquidity constraints and concerns over reciprocal tariffs as factors pressuring the rupee.
The US Federal Reserve’s stance on interest rates and global risk sentiment also played a role in influencing foreign exchange market movements.
A weakening rupee raises concerns over imported inflation, particularly in crude oil and raw materials, impacting corporate profit margins.
Sectoral Performance: IT and Pharma Stocks Face Selling Pressure
IT Stocks Under Pressure Amid Global Uncertainty
The Nifty IT index witnessed a decline, with major IT companies such as Tech Mahindra, Infosys, and TCS seeing losses.
Uncertainty surrounding US trade policy and visa regulations weighed on investor sentiment, as IT firms derive a significant portion of their revenues from North America.
Pharmaceutical Stocks Decline on Trade Concerns
Pharma stocks like Dr Reddy’s Laboratories and Cipla saw moderate losses, reflecting investor concerns over potential US FDA regulations and pricing pressures.
The sector has been facing increased scrutiny in the US market, with new policy changes potentially affecting Indian pharma exports.
Banking and Financial Stocks Witness Volatility
Banking stocks, including Axis Bank and Kotak Mahindra Bank, saw mild declines amid market-wide weakness.
Investors are closely watching interest rate trends and loan growth data, which could influence the sector’s performance in the coming weeks.
Technical Analysis: Nifty’s Key Support and Resistance Levels
Downside Risk and Key Levels to Watch
According to Anand James, Chief Market Strategist at Geojit Investments:
23,600 acted as a key support level, but an evening star candlestick pattern is forming, suggesting further downside.
If Nifty breaches 23,600, it could drop further to 23,300.
A recovery above 23,700-23,760 could delay further losses, but a surge to 24,200 remains unlikely in the near term.
Market Sentiment and Future Trends
Market analysts suggest that the near-term outlook remains cautious, with volatility expected to persist amid global trade tensions.
Investors should closely monitor the upcoming US tariff announcement on April 2, as it could have a significant impact on global equities and trade flows.
While long-term fundamentals of the Indian economy remain robust, the short-term outlook will depend on global cues, currency movements, and corporate earnings trends.
