Nifty cracks under 22,400, Sensex slips as RBI cuts growth estimates, US-China tariff tensions hit fever pitch

The 23,500 strike holds the maximum Call open interest with 1.22 crore contracts, according to the weekly options data.

Indian frontline indices Nifty 50 and Sensex opened with sharp losses in trade on April 9, tracking negative global cues amid escalating tariff tensions. Further, the RBI's MPC along with the index's weekly expiry will also dictate market sentiment.

The Reserve Bank of India trimmed its GDP growth estimates for FY26 to 6.5 percent, down from 6.7 percent earlier. Further, the RBI's Monetary Policy Committee slashed the key lending rate by 25 basis points, taking a unanimous decision. Further, the central bank shifted its stance to 'accommodative'.

On the flip side, the RBI Governor Sanjay Malhotra also stated that the GY26 CPI inflation was seen at four percent versus 4.2 percent earlier.

At 10:14 am, the Sensex was down 439.37 points or 0.59 percent at 73,787.71, and the Nifty was down 158.55 points or 0.70 percent at 22,377.30. About 837 shares advanced, 2143 shares declined, and 136 shares unchanged.

All sectors barring Nifty FMCG traded with sharp cuts, with IT, pharma, and metal stocks falling the most as U.S. country-specific tariffs are due to kick-in today. The broader markets slipped into the red as well, with the Nifty Midcap 100 and Nifty Smallcap 100 tumbling around 0.6 percent respectively.

In the previous session, the markets made a smart recovery. However, with the sell-off continuing unabated today, experts noted that the gains were a bull trap or dead-cat bounce and the ongoing bearish sentiment is likely to prevail. Further, as markets will be closed for trading on Thursday, the Nifty 50 weekly expiry, today, Wednesday marks the index expiry day as well.

Despite the negativity, experts suggest that India will outshine the global markets. "The Indian market has been the out-performer in the recent global sell-off. India’s outperformance will continue amidst the turmoil," said K Vijayakumar, Chief Investment Strategist, Geojit Investments.

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U.S.-China tensions escalate 

U.S. President Donald Trump pledged an overall 104 percent levy against Chinese goods, rapidly increasing his previous tariff after Beijing retaliated, by imposing 34 percent tariffs on all goods imported from the U.S. If there is a response from Beijing on Trump's latest tariffs, the situation could further devolve, noted experts.

Global markets weak 

So far, the escalating trade war has raised concerns of a global recession, as uncertainty and volatility have dictated the sentiment. Overnight, Wall Street extended losses to a fourth consecutive session, with S&P 500 giving up the 5,000 level, falling almost 19 percent from its all-time high. After opening in the green, the Dow Jones index tumbled 0.8 percent, while the tech-heavy Nasdaq Composite index cracked 2.5 percent.

Asian markets were also gripped with a bearish sentiment, as Japan's Nikkei 225 crashed three percent, while Hong Kong's Hang Seng index and the Taiwan Weighted index tumbled two percent. Indices in China, such as the Shanghai Composite and the CSI 100 traded with cuts.

RBI MPC may cushion blow

Investors will closely watch RBI Governor Sanjay Malhotra’s monetary policy announcement at 10 AM, with expectations of a 25 bps rate cut following  a similar move in February. The possibility of a rate cut will be driven by moderating inflation and global growth concerns due to Trump’s aggressive trade stance. Further, experts expect the RBI to shift its policy stance to 'accommodative'.

"Easing inflation provides the RBI with scope for a more accommodative policy approach. Concerns regarding global economic headwinds, especially following the US's announcement of reciprocal tariffs, also play a role in these expectations," Devarsh Vakil, Head of Prime Research at HDFC Securities said.

Derivatives positioning indicates bearishness

On the derivatives front, according to the weekly options data, the 23,500 strike holds the maximum Call open interest (with 1.22 crore contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 23,000 strike (99.32 lakh contracts), and the 23,300 strike (88.85 lakh contracts).

"Adding to the pressure, significant call writing at higher strikes hinted at persistent bearish sentiment," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

"We expect the markets to remain volatile today as well, as traders navigate the weekly derivative expiry today. FPI traders purchased index options yesterday ahead of the weekly expiry, indicating their willingness to pay option premium prices while anticipating increased market volatility today," said Devarsh Vakil.

Sectors under pressure

Indian metal stocks sank 1.5 percent, following US President Donald Trump’s announcement of a sweeping 104 percent tariff on Chinese goods. This sharp escalation comes in response to retaliatory measures taken by China and marks a significant increase from Trump’s previous tariff levels.

Pharmaceutical stocks took a beating, with the pharma index slipping two percent, after U.S. President Donald Trump reiterated his plans to impose heavy tariffs on pharmaceutical imports, in an attempt to reshore drug manufacturing to the U.S.

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