Markets fall as US fires fresh trade salvo; Sensex down 548 points

Trump's threat to impose 25% tariffs on all steel, aluminium imports unsettles investors

Indian equities experienced a fresh downturn on Monday, influenced by US President Donald Trump’s plans to impose tariffs on US steel and aluminium imports, along with reciprocal tariffs on countries that tax US imports.

 

The BSE Sensex closed the session at 77,312, marking a decline of 548 points, or 0.7 per cent. The Nifty 50 also ended lower at 23,382, down by 178 points, or 0.7 per cent. This marked the fourth consecutive day of declines for both indices. The market capitalisation of BSE-listed companies fell by Rs 6 trillion to Rs 417 trillion.

 

Investors worldwide were unsettled after President Trump announced on Sunday his intention to impose 25 per cent tariffs on all steel and aluminium imports into the US. If implemented, these measures could lead to inflationary pressures and reduce the likelihood of US rate cuts. Trump did not specify a timeline for these tariffs, adding to the uncertainty. This announcement follows a series of similar proposals, though it remains unclear whether all will be implemented. Previously, Trump had announced tariffs on Canada and Mexico but later granted them a 30-day extension while proceeding with 10 per cent tariffs on China.

 

 

“The US tariff threats continued to impact market sentiment. Domestic yields are inching higher as investors stay cautious about riskier assets and shift their investments to safe-haven assets like gold. On the earnings front, companies are facing downgrades in estimates due to weak demand, margin pressure, and a cautious near-term outlook,” said Vinod Nair, head of research at Geojit Financial Services. 

 

Higher benchmark rates make emerging markets, including India, less attractive. Trump’s moves could also strengthen the US dollar. The dollar index rose 0.3 per cent to 108.3. The rupee hit an all-time intraday low against the dollar, trading at 87.47. Investors also moved money to safer assets, causing gold prices to rise by 1.54 per cent to $2,905 per ounce in international trading.

 

Indian equities have seen a selloff since hitting their all-time highs in September, driven by slowing corporate earnings and selling by foreign portfolio investors (FPIs), which led to a broad decline in share prices.

 

“The Bharatiya Janata Party’s victory in the Delhi Assembly election was expected to bring some stability to market sentiment, but global concerns and foreign investor activity have overshadowed the impact. With the Budget now behind us and the Reserve Bank of India providing monetary relief, attention will shift back to the last leg of third-quarter earnings, corporate guidance, and global macros amid turbulence in global markets due to Trump’s trade policies," said Siddhartha Khemka, head of research and wealth management at Motilal Oswal Financial Services.

 

FPIs were net sellers worth Rs 2,464 crore on Monday, while domestic institutions were net buyers to the tune of Rs 1,516 crore. The market breadth was weak, with 3,125 stocks declining and only 993 advancing. More than two-thirds of Sensex stocks declined. HDFC Bank, which fell 0.9 per cent, was the biggest contributor to the Sensex’s decline, followed by Reliance Industries, which fell 1.06 per cent.