Nifty 50, Sensex extend losses, sink over 1% investors turn cautious ahead of Trump's reciprocal tariffs; auto, IT stocks crack

For Q1 of 2025, the S&P 500 and the Nasdaq Composite posted their worst quarterly performances since 2022 amid Trump's reciprocal tariffs.

Domestic benchmark indices Nifty 50 and Sensex extended losses opening  losses on the first trading session of FY26, a day ahead of the implementation of U.S. President Donald Trump's reciprocal tariffs.

At 10:32 am, the Sensex was down 972.03 points or 1.26 percent at 76,442.89, and the Nifty was down 227.35 points or 0.97 percent at 23,292.00. About 2321 shares advanced, 972 shares declined, and 125 shares unchanged.

The broader markets outperformed the frontlines, as the Nifty Midcap 100 and Nifty Smallcap 100 slipped around half a percent each. On the sectoral front, the Nifty IT index cracked 1.5 percent, while the realty index fell one percent as the Maharashtra government hiked the Ready Reckoner Rates, making properties more expensive to buy. On the flip side, the Nifty Auto and Nifty Media indices jumped one percent each.

Over the past few sessions, the Indian markets have traded with high volatility as investor sentiment remained cautious ahead of the reciprocal tariffs. IT, automobile, and pharmaceutical stocks saw heavy selling pressure.

"On a technical basis, the Nifty 50 would need an outright rise above 23,750 to revive strength", said Anand James, Chief Market Strategist, Geojit Investments, "else, expect sideways trade to continue with downside bias aiming 23,300."

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After witnessing buying in the previous six sessions, foreign institutional investors (FIIs) remained net sellers on March 28 as they sold equities worth Rs 4,352 crore. On the other hand, domestic institutional investors (DIIs) continued their buying, purchasing equities to the tune of Rs 7,646 crore on the same day.

"India outperformed most markets in March with 6.3 percent return. FIIs turning buyers and the consequent short covering contributed to the rally. Can the rally continue or will there be another downturn? This will depend mainly on what Trump announces in tariffs," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

He added that if the tariffs are lower-than-feared, there can be a rally in the market which will be led by externally linked sectors like pharmaceuticals and IT. On the other hand if the tariffs are severe there can be another round of downturn in the market. Investors can wait and watch and respond after the details are known.

Last week, President Trump implemented a 25 percent tariff on imports of automobiles, potentially driving up the costs of average vehicles. This automotive tariff pronouncement preceded the highly anticipated reciprocal tariff announcement scheduled for April 2.

Overnight, Wall Street's key indices ended mixed; the S&P 500 and the Dow Jones Industrial Average gained, while Nasdaq Composite lost 0.14 percent.

For the January to March quarter, the S&P 500 and the Nasdaq Composite posted their worst quarterly performances since 2022, as uncertainty around the Trump administration's economic agenda roiled U.S. equity markets in the first quarter of 2025. The two benchmarks also suffered heavily in March, recording their biggest monthly percentage drops since December 2022.

Beleaguered telecom operator Vodafone Idea Ltd. (VI) shares jumped 10 percent on open after the firm announced the Central government will convert its outstanding spectrum dues into equity shares.

Further, Hindustan Aeronautics Ltd. (HAL) shares gained six percent in the early trade after the company received contracts worth Rs 62,700 crore from Defence Ministry. International brokerage UBS also hiked its target price on the defence player to Rs 5,440 per share.

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