Sensex and Nifty closed lower on March 4, as sweeping U.S. tariffs on key trading partners—China, Canada, and Mexico—rattled global markets, weighing on investor sentiment. Sensex ended in the red for the third straight session, while Nifty 50 extended its losing streak to ten sessions—its longest since inception nearly three decades ago.
At close, the Sensex was down 96 points or 0.1 percent at 72,989, and the Nifty was down 36 points or 0.2 percent at 22,082. About 2,133 shares advanced, 1,673 shares declined, and 118 shares were unchanged.
The U.S. has officially implemented a 25 percent tariff on imports from Canada and Mexico, while Chinese goods now face a cumulative 20 percent duty following an additional 10 percent levy. In a further escalation, reciprocal tariffs will kick in from April 2, intensifying concerns over trade disruptions and financial market instability.
Beyond direct trade implications, these tariffs could drive inflation higher in the U.S., potentially forcing the Federal Reserve to maintain elevated interest rates for longer—a scenario that could dampen foreign investment in emerging markets like India.
"The 21,800-22,000 zone holds multiple support levels for the index. However, persistent global uncertainties, continuous foreign fund outflows, and overall negative sentiment have been driving the market lower," said Ajit Mishra, SVP of Research at Religare Broking.
Mishra said that the next few sessions are critical, as tariff-related concerns are now a reality. "We will likely see retaliatory measures from other nations, and the global market reaction will be key. From a trading perspective, 21,800-22,000 is crucial for any meaningful recovery or rebound."
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The broader markets were mixed. The BSE Midcap index was flat, while the BSE Smallcap index surged over 1 percent.
"The recent decline in small and midcap stocks reflects profit booking following a strong rally, compounded by global market uncertainties." said Abhishek Jaiswal, Fund Manager at Finavenue. "While short-term volatility is inevitable, the broader fundamentals of quality midcap companies remain robust, supported by India's strong economic growth and ongoing structural reforms." He advised investors to prioritise businesses with solid balance sheets and sustainable earnings growth rather than reacting to transient market fluctuations.
"Over the past five years, small-cap earnings have grown by 19.6 percent, while price appreciation has been 26.3 percent," Jaiswal added. "The recent correction has effectively removed excess froth from valuations. With the upcoming Q4 results, we anticipate renewed momentum, positioning small caps for the next phase of growth."
In sectoral action, five of the 13 Nifty sectoral indices remained in negative territory, with IT, auto, and FMCG stocks dragging the market lower.
IT companies, which get a substantial portion of their revenue from the U.S., fell nearly a percent, with Infosys and HCLTech dragging the index down. Data signalling rise in price pressures in the U.S. also hurt IT stocks.
Among Nifty 50 constituents, the top laggards were Bajaj Auto, Hero MotoCorp, Bajaj Finserv, HCLTech, and Eicher Motors, falling 2 to 5 percent. Meanwhile, BPCL, SBI, BEL, Shriram Finance, and Adani Enterprises emerged as the top gainers, rising 1 to 3 percent.
SBI rose 3 percent after global brokerage firm Citi issued a 'double upgrade', moving its rating two notches up—from 'sell' to 'buy'. Citi also hiked SBI’s price target to Rs 830 from Rs 720, implying a potential upside of nearly 20 percent from its previous close.
Meanwhile, ASK Automotive surged to a 5 percent upper circuit following its strategic partnership with Japan’s Kyushu Yanagawa Seiki to manufacture high-pressure diecast alloy wheels for two-wheelers.
Shares of HBL Engineering rose over 3 percent after securing a Letter of Award (LoA) worth Rs 148 crore from the Bhopal Division of West Central Railway.
Shares of Gensol Engineering plunged 20 percent after CARE Ratings downgraded its long-term and short-term bank facilities. The agency downgraded Gensol's long-term bank facilities worth Rs 639.7 crore to CARE D from CARE BB+ (Stable). Additionally, other long-term and short-term bank facilities worth Rs 76.3 crore were downgraded to CARE D from CARE BB+ (Stable) and CARE A4+, respectively.
The Sensex and Nifty were down 18 percent and 19 percent, respectively, from their record highs in September, weighed down by growth concerns, weak corporate earnings, relentless foreign selling, and trade-related uncertainty.
On the first trading session of March, FIIs net sold Indian equities worth Rs 4,788 crore, while DIIs purchased shares worth over Rs 8,553 crore.
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