Benchmark Indices Face Sharp Decline Amid Global Trade Tensions
The Indian equity market witnessed a significant decline on Thursday as the benchmark Sensex and Nifty tumbled following the United States’ decision to impose a 27 percent reciprocal tariff on Indian imports. The move triggered a sharp selloff in key sectors such as IT, auto, metals, and oil & gas, weighing heavily on investor sentiment.
At 2:45 pm, the BSE Sensex was down by 301.80 points or 0.39 percent, trading at 76,315.64, while the NSE Nifty slipped 63.85 points or 0.27 percent to 23,268.50. Market breadth remained largely positive despite the decline in frontline indices, with 2,463 stocks advancing, 1,033 declining, and 102 remaining unchanged.
Mid- and small-cap stocks outperformed despite the broader market selloff, with the Nifty Midcap 100 and Smallcap 100 indices rising nearly 0.5 percent. Analysts believe that while the immediate impact of the US tariffs is visible in large-cap stocks, mid- and small-cap firms, particularly those with limited global exposure, continue to attract buying interest.
Highlights:
Sensex fell by 301.80 points to 76,315.64; Nifty dropped 63.85 points to 23,268.50.
Midcap and smallcap indices rose 0.5 percent despite overall weakness.
Market breadth remained positive with more advancing stocks than declining ones.
IT Sector Takes a Hit as US Tariffs Shake Confidence
The IT sector bore the brunt of the selloff, with the Nifty IT index plunging 4 percent intraday. Heavyweights like Infosys, TCS, and HCL Technologies emerged as the biggest laggards as investors reacted to the steep tariff hike by the US.
Market experts predict near-term revenue challenges for Indian IT firms, particularly those reliant on US-based clients. The combination of seasonal factors, fewer billing days, and concerns over a slowing US economy is likely to impact Q4FY25 earnings and the FY26 outlook.
Sumit Pokharna, Vice President of Fundamental Research at Kotak Securities, commented, “We anticipate a sequential revenue decline for large IT firms, compounded by macroeconomic concerns in the US, which could result in lower discretionary IT spending by clients.”
Highlights:
Nifty IT index plunged 4 percent, leading sectoral losses.
Infosys, TCS, and HCL Technologies among the biggest losers.
Revenue concerns emerge due to the impact of US tariffs and slowing demand.
Chemical Stocks Under Pressure as Profit Margins Face Squeeze
Indian chemical stocks also came under pressure following the tariff announcement, as investors worried about the impact on export revenues and profitability. The US has been a key market for Indian chemical manufacturers, and the sharp rise in import duties—from 3.5 percent to 27 percent—is expected to put pressure on margins.
Export-oriented chemical companies saw their stock prices dip as analysts rushed to reassess earnings projections. The increased cost burden on US buyers could potentially weaken demand for Indian chemical products, leading to reduced order volumes.
Observations:
Chemical sector stocks declined as tariffs created export uncertainty.
A sharp rise in import duties is expected to impact revenue and profitability.
Investor sentiment weakened as analysts cut earnings forecasts for exporters.
Pharmaceutical Stocks Outperform as Sector Benefits from Exemptions
In contrast to the broader market decline, pharmaceutical stocks emerged as bright spots. The Nifty Pharma index surged up to 3 percent as major players like IPCA Labs, Sun Pharma, and Lupin posted gains of up to 5 percent. The resilience of the pharma sector came after the White House confirmed that pharmaceutical products would be exempt from the latest round of US tariffs.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The exemption for pharmaceutical exports is a much-needed positive development. Even in a weak market, sectors with strong domestic consumption and global competitiveness are seen as safe bets by investors.”
Notable Developments:
Nifty Pharma index surged 3 percent, with stocks like Sun Pharma and Lupin rising up to 5 percent.
Exemption from US tariffs boosted investor sentiment in the sector.
Analysts consider pharma stocks as defensive bets amid broader market weakness.
Textile Stocks Gain as Sector Seeks Competitive Advantage
Indian textile stocks also witnessed strong buying interest as investors speculated that the latest round of US tariffs could make Indian textile exports more competitive compared to other Asian markets. While many Asian peers have been subjected to even harsher duties, India’s relative positioning could help domestic firms secure a larger market share in the US.
Market experts believe that although concerns over short-term trade disruptions remain, the Indian textile industry may ultimately benefit from shifting global supply chains. Textile exporters reported increased inquiries from US-based buyers looking to diversify their sourcing away from regions facing steeper tariffs.
Industry Insights:
Textile stocks gained as India’s competitive positioning improved post-tariffs.
Investors bet on increased demand for Indian textile exports in the US.
Long-term benefits expected as global supply chains undergo realignment.
Broader Market Navigating Trade Uncertainties
Despite the immediate selloff in key sectors, analysts remain optimistic about India’s ability to navigate the trade challenges posed by the new US tariffs. While IT and chemical exports face headwinds, the resilience in pharmaceuticals and textiles highlights the diverse strength of the Indian economy.
Global brokerage firm Bernstein remarked that India’s position in global trade remains robust, and the current disruptions could eventually work in favor of Indian exporters as supply chains adjust. Investors continue to monitor developments closely, with a focus on potential government responses to mitigate the impact of the new tariffs.
Broader Market Highlights:
India’s economy remains resilient despite short-term tariff challenges.
Pharmaceutical and textile sectors show strength amid trade uncertainties.
Government policy measures and global trade shifts will play a crucial role in shaping future market trends.
