Sensex, Nifty trade deeply in red in early deals on global sell-off

Indian equity benchmarks made a negative start on Friday tracking sell-off in the global markets amid concerns about a trade war that could fuel inflation and damage the global economy. Sensex and Nifty are trading deeply in red in early deals due to selling in Metal, Healthcare and Oil & Gas counters and amid foreign fund outflows. Foreign institutional investors net sold shares worth Rs 2,806 crore on Thursday. Some cautiousness came as World Trade Organization’s Director-General stated that the measures announced by the US will have substantial implications for world trade and economic growth prospects, and could lead to an overall contraction of around 1 percent in global merchandise trade volume this year. Meanwhile, Indian Rupee opened stronger against the US dollar as the dollar index and crude oil prices plummeted sharply amid growing fears about the economic repercussions of US tariffs.

On the global front, Asian markets are trading lower, following broadly negative cues from Wall Street overnight, as traders continue to assess the impact of the steeper-than-expected reciprocal tariffs imposed by US President Donald Trump on U.S. trade partners. China, which will face a 54 percent tariff rate when the new levies are combined with existing duties, has vowed to take countermeasures. Besides, the average of household spending in Japan was down 0.5% on year in February. China, Hong Kong and Taiwan are closed for Tomb Sweeping Day holiday, while Indonesia remains closed for Eid-ul-Fitr holidays.

The BSE Sensex is currently trading at 75752.61, down by 542.75 points or 0.71% after trading in a range of 75678.54 and 76258.12. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 2.15%, while Small cap index was down by 2.04%.

The sole gaining sectoral index on the BSE was Bankex up by 0.22%, while Metal down by 3.76%, Healthcare down by 3.02%, Oil & Gas down by 2.66%, Capital Goods down by 2.63%, Industrials down by 2.60% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 2.31%, Nestle up by 0.79%, Bharti Airtel up by 0.72%, Bajaj Finance up by 0.57% and Hindustan Unilever up by 0.26%. On the flip side, Tata Motors down by 4.85%, Tata Steel down by 4.17%, Larsen & Toubro down by 3.90%, Sun Pharma down by 3.74% and Reliance Industries down by 2.70% were the top losers.

Meanwhile, former RBI governor Raghuram Rajan has described the reciprocal tariffs on about 60 countries by the Trump administration a ‘self-goal’ and said its impact on India will be ‘smaller’. US President Donald Trump has announced the imposition of additional ad-valorem duties ranging from 10 per cent to 50 per cent on imports from all trading partners. He said ‘Let us recognise that in the short run, this will adversely affect the US economy first and foremost - it is a self-goal as footballers would say. Coming to the effects on other countries, the direct effect of any tariff on India’s exports will be to raise prices for US consumers, reducing their demand, and hence Indian growth’.

The baseline duty of 10 per cent will be effective from April 5 and the 27 per cent from April 9. Certain sectors are exempted from these duties include pharma, semiconductors and energy products. He added ‘Of course, to the extent that the US has applied tariffs on other countries also, and India is competing with producers from those countries, the overall effect will be smaller than if the tariffs had been applied only on India - since US consumers will not be able to substitute away to non-tariffed producers’.

Rajan said the long-term intent of Trump is to increase US production, but, even if feasible, that will take a long time to set up. He said the US reciprocal tariffs on India will probably be disinflationary, as India exports less and retains more goods domestically, and other countries like China try and export to India now that the US market is more closed. About India turn this crisis into an opportunity, Rajan said ‘We can certainly bring down the tariffs we have been raising - that would be beneficial to India regardless of whether it will help us negotiate down US tariffs.’ He said that more generally, India needs to understand the world has become much more protectionist, so ‘we have to be more clever about trade’.

The CNX Nifty is currently trading at 23047.30, down by 202.80 points or 0.87% after trading in a range of 23029.40 and 23214.70. There were 8 stocks advancing against 41 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were HDFC Bank up by 2.26%, Tata Consumer Products up by 1.83%, Nestle up by 0.86%, Bharti Airtel up by 0.67% and Bajaj Finance up by 0.53%. On the flip side, ONGC down by 5.78%, Hindalco down by 5.00%, Tata Motors down by 4.86%, Cipla down by 4.40% and Dr. Reddy's Lab down by 4.21% were the top losers.

Asian markets are trading lower; Nikkei 225 slipped 1144.37 points or 3.41% to 33,591.56, Straits Times fell 117.01 points or 3.06% to 3,825.22 and KOSPI was down by 37.84 points or 1.55% to 2,448.86.