Stocks tumble on global trade war concerns; Sensex down 1,018 points

Benchmark indices recorded their fifth consecutive session of declines on Tuesday after a raft of tariffs introduced by US President Donald Trump stoked concerns of a global trade war, and raised fears of its impact on India.

 

Trump's imposition of a 25 per cent tariff on steel and aluminium imports, and his reiteration of threats to levy reciprocal tariffs against countries that have taxed US imports weighed on investor sentiment.

 

Experts said Trump's threat could make India susceptible to reciprocal tariffs imposed by the US.

 

The Sensex closed at 76,294, down 1,018 points, or 1.3 per cent. The Nifty 50 also ended lower at 23,072, down 310 points, or 1.3 per cent. Both indices, after declining 3 per cent over the past five sessions, are now approaching fresh eight-month lows. The Nifty Midcap 100 fell 3 per cent to its lowest close since June 4, 2024, while the Nifty Smallcap 100 tumbled 3.5 per cent, approaching “bear” market territory.

 

Since their all-time highs in September last year, the Nifty, Nifty Midcap 100, and the Nifty Smallcap 100 have declined 12 per cent, 16 per cent, and 18 per cent, respectively. The total market capitalisation of BSE-listed firms fell by ₹9.3 trillion on Tuesday to ₹408 trillion, lowest since June 5 last year. From the peak, ₹69 trillion has been shaved off India’s market value.

 

On Monday, Trump raised tariffs on steel and aluminium imports to 25 per cent, eliminating previous exemptions for countries and product-specific tariff exclusions. The new tariffs will take effect in March. Trump also mentioned considering similar tariffs on cars, semiconductor chips, and pharmaceuticals. In response, the European Union (EU) stated on Tuesday that it would retaliate against any US tariffs, heightening trade tensions. 

 

Investors are assessing the potential impact of Trump's tariffs on corporate earnings and inflation.

 

"There is significant uncertainty surrounding the tariff policy, which is prompting investors to exit risky assets. Until there is clarity and proper articulation of the tariff policy, investors will remain cautious. Additionally, there is concern in India that China might increase exports to the country due to the US tariffs. The global news flow will likely determine the market trajectory, as most domestic events have passed. Even the earnings season is mostly over," said U R Bhat, cofounder of Alphaniti Fintech.

 

FPIs were net sellers of ₹4,486 crore on Tuesday. So far this year, FPIs have sold a net ₹1 trillion, as per stock exchange data. According to NDSL figures, which also account for primary market flows, the year-to-date selling is nearing $10 billion (₹85,000 crore).

 

"Investors are looking to Prime Minister Narendra Modi's upcoming visit to the US for potential relief from trade uncertainty, while US inflation data will also be a key focus," said Vinod Nair, head of research at Geojit Financial Services.

 

Market breadth was weak, with 3,533 stocks declining, and 479 advancing. All but one of the Sensex stocks declined. Reliance Industries, which fell 1.5 per cent, and HDFC Bank, which dipped 0.9 per cent, were the biggest drags on the Sensex.