FPI selloff ahead of US President Donald Trump tariff move rattles markets

Sensex, Nifty post worst single-day fall since February 28

Indian equity benchmarks plummeted on Tuesday, posting their biggest single-day fall in a month amid heavy foreign portfolio investor (FPI) selling ahead of US President Donald Trump’s announcement of reciprocal tariffs. The Sensex ended the session at 76,025, down 1,390 points, or 1.8 per cent. The Nifty closed at 23,166, a drop of 354 points, or 1.5 per cent. For both indices, this was the biggest single-day decline since February 28, 2025. The total market capitalisation of BSE-listed firms fell by ₹3.4 trillion to ₹409 trillion. India Vix, the gauge of market volatility, rose 8.4 per cent to 13.78. 

FPIs on Tuesday recorded their biggest single-day selling since February 28, offloading stocks worth ₹5,902 crore. Trump is set to announce his reciprocal tariff plan on Wednesday, even as uncertainty remains over whether he will take a tough or lenient stance against US trade partners. Investors fear that the announcement could trigger lengthy and difficult negotiations, exacerbating global economic distress and market turbulence. 

The US President has already imposed tariffs on three major trading partners — Canada, Mexico, and China. He has also announced tariffs on automobiles, steel, and aluminium imports. On Sunday, he said the reciprocal tariffs would not be limited to a select group of countries with significant trade imbalances but would apply broadly. Mean­while, a US Trade Representative report on foreign trade barriers highlighted that India continues to impose steep tariffs and a range of regulatory hurdles on imports from the US. Market experts said the response of other countries to the tariff announcements would be crucial. 

“A lot of short positions are being built. Investors expect major exporters to be affected, as Trump has said there will be no exceptions. The key question is how much of a margin hit US exporting companies will take due to the tariffs,” said U R Bhat, co-founder of Alphaniti Fintech.  

 

Looking ahead, corporate results for the January-March quarter, along with US trade policy, will shape market trends. 

“Indian markets reacted to factors that rattled global markets the day before, primarily concerning tariffs. It’s not just about Trump’s announcement on Wednesday; it’s also about how other countries respond to the reciprocal tariffs. Corporate results for the January-March quarter are unlikely to be strong, and margin pressure will likely persist. Even if the results are decent, uncertainty in management commentary due to tariffs could weigh on sentiment,” said a fund manager. 

Market breadth remained strong, with 2,716 stocks advancing and 1,343 declining. Barring two, all Sensex stocks fell. HDFC Bank, down 3.4 per cent, and ICICI Bank, down 2.3 per cent, were the biggest contributors to the Sensex’s decline. Vodafone Idea surged 19 per cent after the central government announced it would convert part of the company’s outstanding spectrum auction dues into equity. Gold prices hit a record high of $3,149 per ounce intraday. The 10-year US bond yield was at 4.15 per cent after falling 10 basis points over the past three sessions.