Sensex, Nifty fall 1% as US tariff announcements stoke fears of global slowdown

By | April 4, 2025

Sensex, Nifty Plunge Amid Global Jitters Over New US Tariffs

Mumbai, April 5 – Indian stock markets tumbled on Friday, as global economic concerns weighed heavily on investor sentiment. The selloff followed US President Donald Trump’s surprise announcement of steep reciprocal tariffs against several major trading partners — including India. As a result, panic spread across financial markets worldwide.

Indices Slide on Global Trade War Fears

Both the BSE Sensex and NSE Nifty opened in the red and extended losses throughout the session. In fact, the Sensex plummeted by 762 points (almost 1%) to close at 75,552.41, while the Nifty 50 fell by 277.55 points (1.19%) to 22,972.55. Clearly, fears of a global trade war have begun to take a toll.

Global Markets React Sharply to US Tariffs

Trump’s announcement on Thursday triggered immediate reactions. For example, US markets saw sharp declines — the Dow Jones fell 1,679 points (3.98%), the Nasdaq dropped 1,050 points (5.97%), and the S&P 500 slipped nearly 275 points (4.84%).

In response, India’s stock market followed the global lead. Notably, the tariffs announced include a 26% hike on certain Indian exports, raising fears about reduced competitiveness and potential job losses in export-heavy sectors.

Furthermore, Asian markets mirrored the downward trend. Japan’s Nikkei hit its lowest level since August. Similarly, stocks in South Korea, Singapore, and Taiwan faced significant declines. Meanwhile, markets in China and Hong Kong were closed due to public holidays.

All Major Sectors in the Red

The damage wasn’t limited to just the benchmark indices. Losses were widespread across major sectors:

  • Nifty Metal plunged 4.41%, reflecting worries over reduced global demand.
  • Nifty Pharma dropped 4.75% due to concerns about disrupted trade routes.
  • Nifty IT fell 2.38%, while Nifty Oil & Gas lost 3.09%.

Additionally, leading laggards included ONGC (-6.06%), Hindalco Industries (-5.56%), Tata Motors (-5.07%), Cipla (-5.04%), and Tata Steel (-4.69%).

Moreover, the broader market echoed the trend. Nifty Midcap 100 declined 2.27%, and Nifty Smallcap 100 fell 2.78%.

Experts Warn of Prolonged Volatility

Experts are cautioning that this could be more than a temporary dip. According to Devarsh Vakil, Head of Prime Research at HDFC Securities, “The new tariffs may escalate into a long-term trade war. Markets fear prolonged disruption if tensions rise further.”

Likewise, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out, “We are staring at a contraction in global trade. While India’s domestic demand may offer some cushion, external shocks are unavoidable.”

Consequently, investors are expected to shift focus toward defensive sectors in the near term.

Government Yet to Issue Official Response

As of Friday afternoon, there has been no formal response from the Indian government. However, officials from the Ministry of Commerce are reportedly preparing to meet exporters and other stakeholders. If necessary, New Delhi may consider countermeasures or financial relief packages.

Historically, India had responded to US tariffs in 2019 by placing duties on 28 American goods. Whether such actions will be repeated remains uncertain for now.

Flight to Safety: Gold and Bonds Rise

Amid rising uncertainty, investors turned to safer assets. For instance, gold prices jumped 1.5% in early trade, while the rupee weakened, breaching the ₹83 mark against the US dollar.

At the same time, bond yields dropped, signaling a move towards fixed-income options. The 10-year government bond yield fell from 7.01% to 6.94%, indicating strong demand for stable returns.

Is This the Dip to Buy?

Interestingly, not all experts are pessimistic. According to Rachit Khare, fund manager at ValorCap, “India’s fundamentals remain robust. This correction may offer an opportunity for long-term investors to accumulate quality stocks at attractive valuations.”

Nevertheless, he advised caution. “While bargains exist, further volatility is likely. Investors should remain selective and stick with companies that have strong financials,” he added.

Short-Term Outlook: Cautious and Uncertain

Looking ahead, market sentiment is expected to stay fragile. Key factors to watch include:

  • Upcoming corporate earnings
  • Central bank policy guidance
  • Official government response to US tariffs

Until more clarity emerges, analysts suggest limiting exposure to high-risk trades, avoiding speculation, and focusing on fundamentally sound investments.

Conclusion

The sharp decline in the Sensex and Nifty reflects growing anxiety over international trade tensions and economic instability. Although India’s economy remains fundamentally strong, it is not immune to global headwinds. In the days ahead, investor discipline, diversification, and a long-term view will be essential to weather the storm.