Indian equity benchmarks Sensex and Nifty ended lower for the fourth session in a row on February 10, as U.S. President Donald Trump escalated trade tensions with plans to impose fresh duties on all steel and aluminium imports, along with additional reciprocal tariffs. The announcement also sent the rupee to a record low of 88 intraday.
The sell-off was broad-based, with financials, oil and gas, auto, and metal stocks leading the slide. Market volatility spiked, pushing the India VIX up more six percent to 14.5.
At close, the Sensex was down 548 points or 0.7 percent at 77,311, and the Nifty was down 178 points or 0.8 percent at 23,381. About 1,029 shares advanced, 2,917 shares declined, and 108 shares were unchanged.
"As long as there's no clarity on the next steps—what tariffs the U.S. will impose, on which countries, and how others will respond—the market will remain volatile. These tariff-related developments will have spillover effects on India and other global markets," said Aditi Gupta, Economist at Bank of Baroda.
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Gupta noted that uncertainty is driving investors toward safer assets like U.S. equities. "Over the next couple of months, as we get more clarity on U.S. policies—who is imposing tariffs, who is retaliating, and to what extent—markets should stabilize. Right now, the market sentiment is largely driven by nervousness. Once the policy outlook is clearer, some normalcy should return," she added.
Market sentiment remains largely negative, weighed down by FII outflows, tariff tensions, and weak Q3 earnings. "There has not been any such sort of news or announcements which can change the direction of the market. Trump issue-all his announcements and the volatility, is going to continue," said Ambareesh Baliga, an independent market analyst.
Foreign investors extended their exodus, offloading Rs 10,179 crore worth of Indian equities in February so far, as a stronger U.S. dollar and rising Treasury yields eroded the appeal of emerging markets. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that with the dollar index above 108 and U.S. 10-year bond yields at 4.5 percent, foreign institutional investors are likely to continue selling into rallies, capping any major upside.
The rupee hit an all-time low on February 10, sliding to 87.95 per dollar, in tandem with a broader decline in Asian currencies. "With ongoing capital outflows, global trade tensions, and a strong dollar, rupee volatility is expected to persist in the 87.25 - 88.00 range," said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.
The broader markets bore the brunt of the rout, underperforming the benchmarks as both the BSE Midcap and BSE Smallcap indices tumbled over 2 percent.
All 13 major sectoral indices were in the red, with the metals pack taking the biggest hit. The BSE Metal index plunged nearly three percent after Trump’s February 9 statement vowing to slap 25 percent duties on steel and aluminium imports, on top of existing levies. All 15 stocks in the index declined, with Tata Steel, SAIL, and Vedanta sinking between three and four percent.
Trent, Tata Steel, Power Grid, Titan, and ONGC were among the worst performers, slipping 3-5 percent, while Britannia, Tata Consumer, Kotak Mahindra, Bharti Airtel, and HCLTech managed to stay afloat, rising 0.5-1.5 percent.
Among individual stocks, Oil India shares tumbled over 4 percent after reporting weaker-than-expected third-quarter earnings due to lower selling prices. Shipping Corporation of India sank 6 percent after posting a lower December-quarter profit, while water treatment firm VA Tech Wabag climbed nearly 4 percent after securing a $364 million order and reporting strong quarterly numbers. Shares of Mazagon Dock Shipbuilders gained 3 percent after the state-run company extended gains for a second consecutive session following its strong third-quarter earnings.
On the technical front, Nifty 50's 20-day moving average is offering support at 23,300, said Jatin Gedia, Technical Research Analyst at Sharekhan. "If Nifty falls below 23,300, the next support is at 23,280. Immediate resistance stands at 23,600," he noted.
Investors now turn their focus to CPI inflation data from both India and the U.S., scheduled for release on February 12.
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