Key Highlights:
Indian frontline indices Nifty 50 and Sensex are expected to open with a significant gap-down on April 4, tracking negative global cues after U.S. President Donald Trump announced aggressive reciprocal tariffs that triggered fears of a new global trade war. The reaction was swift and severe across financial markets, with $2.5 trillion wiped out from U.S. stocks, sending ripple effects across Asian and emerging markets, including India.
The impact of the announcement is already visible in early indicators. At 7:30 a.m., the GIFT Nifty index traded half a percent lower, below the 23,200 mark, signaling a likely bearish start to the Indian session.
Global Carnage: U.S. and Asian Markets Dive
The global equity landscape turned red-hot with panic on April 3 as Trump’s sweeping tariff policy targeted multiple countries, including key Asian export economies.
- The S&P 500 dropped 4.9%,
- The Nasdaq 100 fell 5.5%,
- These marked the biggest single-day losses since 2020.
Simultaneously, the U.S. 10-year Treasury yield hovered around the crucial 4% mark, signaling a risk-off sentiment and increased investor preference for safer assets. Oil prices also plummeted, and the U.S. dollar continued to weaken, adding to the global financial jitters.
In Asia, the fallout was just as severe:
- Japanese stocks hit their lowest levels since August 2023.
- South Korea’s Kospi experienced wild intra-day swings amid political upheaval.
- Other Asian markets extended a two-month low, as investors reeled from the surprise policy move.
Indian Markets: Previous Close and What’s Ahead
On April 3, Indian markets showed resilience despite a rocky start:
- Sensex closed 322 points lower at 76,295.36, down 0.42%.
- Nifty 50 slipped 82.25 points, or 0.35%, to settle at 23,250.10.
However, experts believe this resilience may not last if global pressure persists.
Technical Outlook: Nifty Enters Consolidation Phase
According to Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, the Nifty managed a rebound from key support levels but lacked follow-through strength.
“Despite U.S.-imposed tariffs, the Nifty index held its ground, staging a resilient rebound. However, intraday volatility remained subdued, and traders were cautious. The market stayed within a well-defined range, creating both a stiff resistance ceiling and a strong demand base,” Dhameja explained.
The Relative Strength Index (RSI) for Nifty 50 remains below 60, indicating a lack of bullish momentum and continued consolidation.
Key technical levels to watch:
- Support: 23,100–23,000 (aligned with 20 & 50-day EMAs)
- Resistance: 23,350 (immediate hurdle); 23,650 (next breakout target if crossed)
Nagaraj Shetti, Senior Technical Analyst at HDFC Securities, said a sustainable close above 23,350 could change the short-term sentiment positively.
Derivatives & Sentiment Analysis
The market remains driven by macro-economic and geopolitical developments, especially the uncertainty around Trump’s tariff regime. The absence of clarity on which countries or sectors are targeted has made traders adopt a wait-and-watch approach.
In derivatives, FIIs reduced long positions on index futures and turned net sellers in the cash segment, reflecting defensive sentiment. Put writers have now repositioned their strikes around the 23,000 level, indicating this could serve as a crucial psychological and technical base.
Sectoral Impact: What Traders Should Watch
Likely losers:
- IT & Tech Stocks: Heavily exposed to U.S. clients, Indian IT may see fresh selling as Wall Street contracts.
- Exporters: Any retaliatory tariffs could hurt export-focused firms in sectors like textiles, auto components, and chemicals.
- Banking: With volatility rising, banking stocks may remain subdued unless macro clarity returns.
Possible gainers:
- Defensives: FMCG, pharma, and utilities may attract safe-haven flows.
- Gold-linked ETFs or Gold Financing firms: As gold prices firm up globally.
- Oil marketing companies (OMCs): If crude prices remain low, refiners and distributors may benefit in the short term.
Global Investors Turn Cautious
After strong foreign portfolio inflows earlier in the year, FPIs have started booking profits, especially in high-beta and momentum stocks. Concerns over the rupee’s depreciation, potential inflationary pressures, and export-related earnings downgrades have prompted global fund managers to pull back cautiously.
“The sell-off has more to do with sentiment than fundamentals,” said Radhika Menon, an Asia-focused equity strategist. “But if the trade war rhetoric escalates, earnings expectations for several large Indian exporters could take a hit.”
Dollar, Oil, and Currency Watch
- The rupee is expected to open weaker, tracking broad-based dollar strength in the wake of the tariff shock.
- Oil prices, while falling due to weaker global demand outlook, may benefit India in the short term, especially for reducing import bills.
- But prolonged weakness in global demand may also impact India’s export earnings, creating a double-edged sword scenario.
What Should Investors Do?
Given the heightened uncertainty, experts suggest a conservative approach to today’s session and the coming week.
Short-term strategies:
- Avoid fresh long positions in high-volatility sectors.
- Focus on defensive or low-beta stocks.
- Watch key technical levels, especially the 23,000–23,100 support band.
- Be prepared for high intraday volatility and sudden sentiment shifts based on news flow.
Long-term outlook:
The long-term India growth story remains intact, but in the near term, the global policy landscape, especially from the U.S., will dictate sentiment.
Market’s Moment of Reckoning
With Trump’s reciprocal tariffs sparking fears of a full-scale global trade war, Indian markets are now at a crossroads. While the Nifty 50 and Sensex showed resilience on April 3, a gap-down opening is likely on April 4, with key levels like 23,000 under threat.
As volatility returns and global investors become more selective, Indian traders and investors must prepare for choppier days ahead, tracking not only domestic indicators but also the global chessboard of trade, tariffs, and macro policy.
Disclaimer: This article is for informational purposes only. Views expressed by analysts do not reflect the opinion of Hindustan Herald. Please consult a certified financial advisor before making any investment decisions.
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