Indian benchmarks join global selloff; Sensex, Nifty fall over 1%

Uncertainty about global growth may add to market turbulence

India’s benchmark indices fell sharply on Friday, joining the global selloff in equities, following US President Donald Trump’s sweeping retaliatory tariffs that intensified a global trade war and stoked recessionary fears.

 

Investors saw their wealth erode by ₹10 trillion, as the 30-share BSE Sensex tumbled 930.67 points or 1.22 per cent to settle at 75,364.69. The NSE Nifty declined 345.65 points or 1.49 per cent to close at 22,904.45.

 

China's announcement of retaliatory measures and Trump's statement on impending tariffs on the pharma sector dented hopes that India may benefit from relatively lower trade tariffs. 

 

China slapped a 34 per cent additional tariff on imports from the US in a tit-for-tat response to Trump's move to impose a similar levy on Chinese goods.

 

 

Although the tariffs imposed on India are relatively lower compared to those of its Asian peers, the uncertainty about global growth is likely to add to market turbulence in the near term. 

 

These tariffs come at a time when India’s corporate earnings remained tepid over the past two quarters. 

 

"Domestically, while the direct impact of these tariffs is relatively moderate compared to other major economies, it remains more substantial than initially projected. As the fourth quarter earnings season approaches, a sequential improvement in corporate performance is anticipated. However, the prevailing weak market sentiment suggests that the consolidation phase may persist in the near term," said Vinod Nair, head of research of Geojit Financial Services.

 

Trump's tariff salvo on pharma exports led to the Nifty Pharma index declining by 4.03 per cent, its biggest decline since July 27, 2021.

 

The Nifty IT index slipped 3.6 per cent. In the past two sessions, the IT stock gauge declined by 7.6 per cent. IT firms derive a chunk of their revenues from the US.

 

The escalating trade war rattled commodity markets.

 

Brent crude slipped by 6.4 per cent and was trading at $ 66.7, the lowest since August 2021 and the biggest drop since July 2022.

 

The Nifty Metal index plummeted over 6 per cent on concerns that a global slowdown will suppress commodity prices and demand, as traders sought refuge in haven assets. 

 

The 10-year US bond yield fell below the first time since October 2024 and was at 3.9. The dollar index was trading at 102.04, declining by 0.03 per cent.  

 

The market breadth was weak, with 1,029 stocks declining and 2,923 advances. More than two-thirds of Sensex stocks declined. Reliance Industries fell 3.5 per cent and was the biggest contributor to the Sensex decline, followed by Larsen & Toubro, which fell by 4.7 per cent.

 

"The sharp fall in the global markets — particularly in the US — and fresh concerns over potential tariffs on pharma impacted sentiment negatively. However, sustained strength in banking and financial stocks helped somewhat limit the overall downside. Looking ahead, we anticipate a time-wise correction in the Nifty index,” said Ajit Mishra, SVP- of research of Religare Broking.

 

Foreign portfolio investors (FPIs) and domestic institutions were the net sellers on Friday; FPIs sold shares worth ₹3,484 crore and DIIs worth ₹1,720 crore.