Red alert on Dalal Street: stocks set to fall as Trump drops tariff bombshell

GIFT Nifty:

The GIFT Nifty April 2025 futures contract is down 55 points, indicating a negative opening in the Nifty 50 index today.

US President Donald Trump announced a 27% reciprocal tariff on India, citing the higher import duties India imposes on US goods. Additionally, he introduced a 25% tariff on automobile imports into the US. The latest tariff announcement could pressure sectors like IT and automobiles in the stock market.

Importantly, no new reciprocal tariffs were announced for the pharmaceutical sector. According to a White House fact sheet, drugs and certain other products'some of which are already subject to existing tariffs'will not be affected by the latest levies. However, Trump has hinted that future tariffs on pharmaceuticals, semiconductors, and other sectors may be unveiled at a later date.

Institutional Flows:

Foreign portfolio investors (FPIs) sold shares worth Rs 1,538.88 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 2,808.83 crore in the Indian equity market on 2 April 2025, provisional data showed.

According to NSDL data, FPIs have sold shares worth Rs 6984.73 crore in the secondary market during April 2025 (so far). This follows their sale of shares worth Rs 6027.77 crore in March 2024.

Global Markets:

US Dow Jones index futures tumbled 833 points, signaling a weak opening for Wall Street as markets reacted to President Donald Trump's latest trade offensive. Trump announced a sweeping 10% tariff on all imported goods, with even steeper reciprocal duties for certain nations.

In a bold move, Trump unveiled new trade measures on Wednesday, slapping a 24% reciprocal tariff on Japan, despite its status as one of the United States' closest allies. China faces an additional 34% tariff, adding to the existing 20% levies. Meanwhile, the European Union, and others will see tariffs ranging from 20% to 49%.

The broad-based tariffs take effect on April 5, while the country-specific hikes begin on April 9. Notably, Canada and Mexico were exempt from the baseline tariffs due to existing agreements, but they will still be subject to 25% duties on most goods.

Additionally, the White House announced a 25% tariff on foreign-made automobiles and key auto parts, set to take effect on April 3, 2025.

Trump defended the move, citing unfair trade practices and currency manipulation, arguing that the tariffs would revitalize American industries and reduce national debt.

Financial markets responded swiftly, with US stock futures plunging on fears of rising inflation and retaliatory measures from key trading partners. Asian markets also slid as investors scrambled for safe-haven assets, worried that Trump's aggressive trade stance could dent global growth.

Before the tariff announcement, US stocks had a volatile session, with major indices posting gains. The S&P 500 rose 0.7%. The Dow Jones Industrial Average added 0.6%, and the Nasdaq composite climbed 0.9%.

Tesla rebounded, surging over 5%, following reports that CEO Elon Musk may step down from his government advisory role to fully focus on the EV company.

Rivian Automotive slumped 6% after reporting a sharp decline in Q1 deliveries, as demand softens.

Ncino plunged 20% after issuing disappointing guidance, missing Wall Street estimates.

CoreWeave Inc extended its rally, soaring 16%, amid reports that Google is in advanced talks to rent Nvidia AI services from the cloud computing firm.

On the macroeconomic front, the US ADP National Employment Report showed that private payrolls increased by 155,000 in March, following an upwardly revised 84,000 gain in February'a sign that the labor market remains resilient despite economic uncertainties.

Domestic Market:

Equity benchmarks ended with strong gains on Wednesday, snapping a two-day losing streak, driven by positive domestic data. The Nifty50 opened near 23,200, climbed to 23,350 intraday, and closed near the day's high above 23,330. All NSE sectoral indices finished in the green, led by consumer durables and FMCG. Meanwhile, investors remained cautious amid uncertainty over U.S. tariff plans, which could shape the near-term global market outlook.

The S&P BSE Sensex surged 592.93 points or 0.78% to 76,617.44. The Nifty 50 index jumped 166.65 points or 0.72% to 23,332.35. The 50-unit index fell 1.81% in the past two sessions.

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