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People outside the Bombay Stock Exchange (BSE) building, in Mumbai, Thursday, April 3, 2021. Indian equity markets slipped during Thursday’s trade after Trump announced 26% tariffs on foreign imports to the US.
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Equity benchmarks ended lower on Thursday but showed resilience after US President Donald Trump’s announcement of a 26 per cent reciprocal tariff on Indian imports, with sectoral performance remaining mixed as investors assessed the potential impact on different segments of the economy.
The BSE Sensex closed at 76,295.36, down 322.08 points or 0.42 per cent from its previous close, while the Nifty50 settled at 23,250.10, losing 82.25 points or 0.35 per cent. The indices opened with a sharp gap-down, but managed to recover partially during the session.
“Markets ended slightly lower on the weekly expiry day, largely weighed down by weak global cues. The Nifty index opened lower in response to the US tariff announcements, but saw some recovery due to resilience in select heavyweight stocks,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.
IT stocks bore the brunt of the selling pressure, with the Nifty IT index plummeting over 4.21 per cent. TCS (-3.97 per cent), HCL Technologies (-3.87 per cent), Tech Mahindra (-3.73 per cent), and Infosys (-3.51 per cent) were among the top losers on the Nifty. Analysts attributed the sharp decline in IT stocks to concerns about potential recession in the US, which accounts for about 65 per cent of Indian IT companies’ revenues.
However, pharmaceutical stocks emerged as the bright spot, with the sector rallying over 2 per cent. No reciprocal tariff on products like pharma and mineral fuels can be considered a positive for India, where today Sun Pharma surged 3.41 per cent, while Cipla gained 3.28 per cent. Power Grid Corporation was the top gainer on the Nifty, rising 4.60 per cent, followed by UltraCemCo (3.06 per cent) and Shriram Finance (2.30 per cent).
The market’s resilience was largely attributed to the relatively lower tariffs imposed on India compared to other Asian economies, particularly those that directly compete with India in key export sectors. Exemptions on critical sectors such as pharmaceuticals, semiconductors, gold, and energy also helped limit the overall impact on market sentiment. Additionally, the tariffs on textiles and apparel, while substantial, were significantly lower than those imposed on direct competitors including Bangladesh and Vietnam.
Continued foreign institutional investor (FII) interest also supported the Indian markets, despite the tariff news. “Positive developments in India’s manufacturing sector, continued foreign investment inflows, and the lack of intervention from the Reserve Bank of India have provided steady support to the rupee over the past few weeks,” noted Dilip Parmar, Senior Research Analyst at HDFC Securities, indicating sustained foreign investor confidence in the Indian economy.
“The market’s measured response to the US tariffs reflects expectations of ongoing trade discussions between India and the US, as well as the possibility of higher tariffs impacting other countries more significantly, limiting the impact on Indian exports,” Mishra added.
The broader market outperformed the benchmark indices, with the Nifty Midcap 100 and Nifty Smallcap 100 indices closing with gains of 0.21 per cent and 0.58 per cent, respectively. Market breadth remained positive, with 2,813 stocks advancing and 1,169 declining on the BSE.
“India’s comparatively lower tariffs, especially relative to other Asian economies including China, Vietnam, and Thailand, offer a distinct advantage in attracting Foreign Institutional Investors (FIIs),” noted Akhil Puri, Partner, Financial Advisory, Forvis Mazars in India. “With a 27 per cent reciprocal tariff on India versus 34 per cent on China, India presents a more cost-efficient destination for global investors.”
On the economic front, Anubhuti Sahay, Head – India, Economics Research, Standard Chartered Bank, estimated that “an effective 20 per cent tariff increase on Indian imports to the US (after considering the exempted goods) is likely to adversely impact India’s GDP by 35-40 bps, ceteris paribus.”
The Indian rupee showed resilience despite initial volatility. “Rupee ended flat, but traded in a volatile range between 85.75 and 85.35, as markets reacted to Trump’s reciprocal tariff policy. However, the impact on India was seen as limited, with key sectors like Pharma and FMCG largely unaffected,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
From a technical perspective, Rupak De, Senior Technical Analyst at LKP Securities, noted, “Short-term support is placed at 23,100, and as long as the Nifty stays above this level, the trend is likely to remain strong.”
In commodity markets, gold faced profit-booking after an initial rally. “Gold saw an initial rally in the morning session, driven by the impact of reciprocal tariffs, but soon faced profit-booking as prices had largely factored in the tariff effects,” Trivedi observed.
Bank Nifty outperformed the broader market, closing at 51,597.35 with a gain of 249.30 points or 0.49 per cent. “Bank Nifty managed to defend support of the 200-Day Simple Moving Average (200-DSMA), placed around 51,030, and formed a bullish candle on the daily chart, indicating strength,” said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd.
Looking ahead, market participants will closely monitor global cues and developments related to the US tariffs, with a particular focus on potential trade deals between India and the US that could mitigate the impact on Indian exports.
Published on April 3, 2025
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