Indian Stock Markets Experience Sharp Decline Amid Tariff Uncertainty

Indian equity markets witnessed a sharp decline on March 28, 2025, with Sensex plunging over 550 points from the day’s high and Nifty slipping below the 23,500 mark. Investors turned cautious ahead of the April 2 U.S. reciprocal tariff announcement, which could have far-reaching implications for various sectors.

At 13:16 IST, the Sensex was down 327.13 points (-0.42%) at 77,279.30, while the Nifty lost 97.35 points (-0.41%) to trade at 23,494.60. The BSE Midcap index slipped 0.7%, and the Smallcap index remained flat.

Sectoral Performance: IT, Auto, and Pharma Stocks Under Pressure

Most sectors were trading in the red, except for FMCG and Oil & Gas, which showed marginal gains.

IT stocks declined 1.3%, led by HCL Technologies and Infosys, as investors awaited key U.S. inflation data.
Auto stocks were down 0.8%, extending their two-day loss to 2%, amid fears of higher import duties on Indian vehicles exported to the U.S.
Pharma stocks fell 0.9%, as U.S. accounts for nearly one-third of India’s total pharmaceutical exports.
BSE Midcap index dropped 0.7%, while the Smallcap index traded flat.

Top Gainers and Losers in the Market

Key losers:

IndusInd Bank, Mahindra & Mahindra (M&M), Power Grid Corp, Maruti Suzuki, HCL Technologies.

Key gainers:

Kotak Mahindra Bank, Hindustan Unilever (HUL), Tata Motors, Nestle India, ICICI Bank.

US Reciprocal Tariffs: A Major Concern for Investors

The biggest factor influencing market sentiment is the upcoming announcement of U.S. reciprocal tariffs on April 2. President Donald Trump’s administration has hinted at selective tariffs, but details remain uncertain.

A 25% tariff on auto imports is expected to be imposed, potentially affecting Indian automakers like Tata Motors and Mahindra & Mahindra.
The pharmaceutical sector is vulnerable, as the U.S. remains India’s largest export market for medicines. Any increase in tariffs could impact revenue growth for major players like Sun Pharma, Dr. Reddy’s, and Cipla.
IT firms such as TCS and Infosys, which generate a significant portion of their revenue from the U.S., face concerns over a potential slowdown in outsourcing demand.

“The market will remain subdued in the next couple of sessions due to uncertainties surrounding the U.S. tariffs, which will influence the immediate trajectory and keep investors cautious,” said Sameet Chavan, Head of Research at Angel One.

Weak Global Cues Add to Market Volatility

Indian stock markets mirrored the weakness seen in Asian markets, which suffered significant losses amid global trade tensions.

Japan’s Nikkei index fell nearly 2%, weighed down by Toyota and Honda, as Trump’s proposed auto tariffs raised concerns over global supply chains.
South Korea’s KOSPI dropped 2%, with key players in the auto and tech sectors witnessing heavy selling pressure.
Hong Kong’s Hang Seng index fell 0.6%, as traders awaited clarity on U.S.-China trade relations.
European stock futures pointed to a weak opening, with Germany’s DAX futures down 0.2%, reflecting worries over the impact of Trump’s trade policies on the global auto industry.

Several leading automakers, including Volkswagen, Volvo, Mercedes-Benz, and Hyundai, have announced plans to shift production outside the U.S. to avoid additional tariffs.

Gold Prices Surge as Investors Seek Safe Haven Assets

As equity markets remained under pressure, gold prices surged to an all-time high, with investors shifting funds toward safe-haven assets.

Spot gold rose 0.7% to $3,077.56 per ounce, after touching a record high of $3,079.01 earlier in the session.
U.S. gold futures climbed 0.8% to $3,086.80 per ounce.
Gold prices have increased by 1.8% this week, marking a fourth consecutive weekly gain.

The inverse relationship between gold and equities became evident, as global uncertainties prompted investors to hedge against market risks.

Support and Resistance Levels for Traders

According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, the Nifty and Sensex are approaching crucial support and resistance zones that will determine short-term market direction.

Support Levels:

Nifty: 23,400 / Sensex: 77,100 → As long as the market trades above this zone, the bullish trend remains intact.
If Nifty breaks below 23,400, the next downside targets are 23,300-23,225, while Sensex could slide to 76,800-76,500.

Resistance Levels:

Nifty: 23,750-23,800 / Sensex: 78,000-78,200 → These levels could act as hurdles for further upside momentum.

A break above these resistance levels could trigger a rally toward new all-time highs, while a breach of support zones may signal further downside pressure.

Market Sentiment Remains Cautious Ahead of US Tariff Decision

The overall market sentiment remains cautious, as investors assess the impact of upcoming U.S. tariff announcements. While some buying interest was seen in FMCG and banking stocks, the broader market remains under pressure due to uncertainties in global trade policies.

Traders are advised to closely monitor global developments and exercise caution while taking new positions in the current market environment.