Key Highlights:
Mumbai, April 3, 2025: The Indian stock market saw a day of measured volatility as investors absorbed the full impact of US President Donald Trump’s April 2 tariff announcement. The latest trade measures—a flat 27% tariff imposed on Indian imports—had their sharpest impact on the IT and auto sectors, two key export pillars for India. Although markets opened lower, they recovered partially by close.
Both Sensex and Nifty ended in the red, with specific sectors facing steep intraday declines. However, investor sentiment stabilized towards the latter half of the session as hopes rose for diplomatic intervention and realignment of trade strategies.
Sensex and Nifty Close Lower, But Show Signs of Support
The BSE Sensex fell sharply in early trade, tracking global cues and concerns over the US-India trade disruption. It managed to recover some of the early losses and closed down 316 points. Meanwhile, the Nifty50 index ended 82 points lower at 23,250, recovering from its intraday low of 23,145.
This decline follows Wednesday’s rally, where Sensex surged 593 points to end at 76,617 and Nifty rose by 162 points to 23,332.
“We’re witnessing range-bound volatility, which is common after geopolitical shocks or major trade policy announcements,” said Nandish Shah, Deputy Vice President at HDFC Securities.
IT and Auto Stocks: The Biggest Losers Post Tariff Hit
The sharpest decline was observed in IT and automobile sectors—both of which are heavily exposed to the export market. With the US being India’s largest export destination, the tariffs have stoked recessionary fears that could affect demand for Indian tech and automotive products.
The BSE Auto Index declined by 548 points, ending at 47,412, led by losses in:
- Bharat Forge
- Bajaj Auto
- Balkrishna Industries
- Tata Motors
- Samvardhana Motherson
- Tube Investments
- TVS Motor
- Ashok Leyland
- MRF
The BSE IT Index also fell sharply, with top firms like Infosys, TCS, and HCL Tech witnessing profit booking amid bleak demand outlook from US clients.
Market Breadth and Gainers Amidst the Sell-Off
Despite sectoral weakness, PowerGrid, Sun Pharma, UltraTech Cement, NTPC, Asian Paints, and Nestle were among the top Sensex gainers, rising up to 4.34%.
The overall market breadth on BSE was positive:
- 2,813 stocks advanced
- 1,169 declined
- 141 remained unchanged
The BSE Midcap Index rose by 128 points to 41,796, while the BSE Smallcap Index jumped by 358 points to 47,494, indicating that retail investor sentiment remained robust.
Also, 72 stocks hit fresh 52-week highs, while 52 stocks touched 52-week lows.
Technical Indicators: What’s Next for the Nifty?
According to technical analysts, Nifty is currently hovering around critical support levels.
“The index found support at the 20-day and 50-day EMA near 23,129, which marks a 38.2% Fibonacci retracement of the rally from 21,964 to 23,869,” said Nandish Shah of HDFC Securities.
He added:
- A breach below 23,129 could drag Nifty toward 22,917
- On the upside, a break above 23,400 could reignite bullish momentum toward 23,650
Shrikant Chouhan of Kotak Securities echoed a similar view:
“The index is locked in a non-directional zone, consistently finding support near 23,150/75,800 and facing resistance at 23,350/77,000. A breakout or breakdown from this range could decide the next leg.”
Broader Strategy: Focus on Stock-Specific Plays
Ajit Mishra, SVP, Research at Religare Broking, advised investors to focus on individual stocks over broader indices.
“The muted market response shows investors expect continued US-India dialogue. From a trading standpoint, the 20-day DEMA at 23,100 is a crucial support level. Holding above it sustains the range; falling below could trigger further selling,” he said.
Meanwhile, Kotak Cherry’s Rohit Murarka emphasized the long-term angle:
“Though the US accounts for 17% of India’s exports, this situation forces India to diversify its trade partnerships and strengthen resilience.”
Investor Wealth Rises Despite Market Decline
Surprisingly, despite a declining Sensex and Nifty, investor wealth rose slightly by ₹0.33 lakh crore:
- Today’s market cap: ₹413.33 lakh crore
- Previous session: ₹412.98 lakh crore
This anomaly is attributed to gains in large-cap defensive and FMCG stocks, which offset heavy losses in cyclical and export-oriented sectors.
Circuit Hits and Market Sentiment
- 8 stocks hit their lower circuit
- 5 shares hit upper circuit limits
This indicates that while market participants remain cautious, select mid-cap and small-cap stocks are continuing to attract investor interest.
Market Reaction in Context: Tariff Tremors, But Not Panic
The muted reaction suggests that investors are not pricing in a full-scale trade war, but rather a negotiation phase that could see either moderation or exemption-based policy announcements.
This sentiment was reflected in the relatively balanced performance of Indian equities today, compared to steeper losses across other Asian markets that depend more on US-China trade.
What Investors Should Watch Next
- US-India Bilateral Talks
- Any diplomatic developments regarding trade could have direct impact on sectoral performance and market sentiment.
- Sectoral Re-Rating
- Analysts expect IT and auto to stay under pressure until clarity on tariffs emerges.
- Support & Resistance Levels
- Watch 23,100 (support) and 23,400 (resistance) on Nifty for near-term direction.
- FII & DII Activity
- Market movement is expected to remain sensitive to institutional flows, especially if FIIs turn net sellers post-tariff.
- Global Cues
- Any indication of recession in the US due to retaliatory tariffs or inflation can impact Indian tech and manufacturing stocks.
Disclaimer
Hindustan Herald provides stock market news for informational purposes only. This article is not financial advice. Investors are urged to consult a qualified financial advisor before making any investment decisions. All market numbers are based on publicly available data and subject to change.
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