Indian equity markets opened sharply lower on February 3, mirroring the weakness in Asian peers, as U.S. President Donald Trump's sweeping tariffs on Canada, Mexico, and China reignited fears of a global trade war. With the Budget 2025 now behind, all eyes are on the RBI's monetary policy announcement on February 7—any aggressive rate cut or liquidity push could provide much-needed support.
At 10 AM, the Sensex was down 683 points or 0.9 percent at 76,822, and the Nifty was down 236 points or 1 percent at 23,245. About 932 shares advanced, 2,285 shares declined, and 146 shares remained unchanged. The Nifty and Sensex are now hovering nearly 10 percent below their September 27 record highs, weighed down by a tepid earnings season, economic slowdown, and persistent foreign selling.
Across Asia, markets tumbled, and U.S. equity futures pointed to steep losses as Trump imposed 25 percent tariffs on Canada and Mexico and a 10 percent levy on Chinese goods over the weekend, citing the need to curb illegal immigration and the drug trade. Canada and Mexico vowed swift retaliation, while China signalled plans to challenge the move at the World Trade Organization. Canada and Mexico pledged retaliatory measures, while China said it would challenge the 10 percent levy imposed upon it by the World Trade Organization.
Follow our live blog for all the market action
Neelkanth Mishra, Managing Director, Co-Head of Equity Strategy for Asia Pacific, and India Strategist at Credit Suisse, told CNBC-TV18 that Trump's tariffs have triggered a significant shift. However, he hopes that the tariff measures will be temporary.
Despite Trump's tariff moves rattling global markets, some see it as an opportunity for India. "For India, the tariff impact appears neutral. In fact, there could be significant opportunities for Indian manufacturing companies," said Kranthi Bathini, Director of Equity strategy at WealthMills Securities.
Back home, all eyes are on the RBI's next move. "With the RBI's credit policy announcement on February 7, we expect some measures to soothe market sentiment. Going forward, steady growth is likely," aid Gaurang Shah, Senior Vice President at Geojit Financial Services. He anticipates a more accommodative stance and possibly a minor rate cut.
When it comes to sectoral performance, all 13 major domestic equity sectors ended in the red. Nifty Oil & Gas, Metal, Energy, and Infra bore the brunt of the sell-off, sliding over 2-3 percent each.
Trump's initial tariffs on China, Mexico, and Canada sent the dollar index soaring. With China being the world's largest importer of metals, concerns over a potential trade war weighed on sentiment for Indian metal companies.
Shares of Vedanta, NALCO, NMDC were the worst hit within the metal pack, falling around 6 percent each, followed by Tata Steel, Jindal Stainless, Hind Copper, Hindalco and SAIL, which were down 3-5 percent. Sharp cuts across these metal counters weighed heavily on the Nifty Metal index, pulling it down over 3 percent.
Also Read | Black Monday on D-Street: Sensex plunges 700 pts as Trump tariffs, other key factors weigh on markets
Jefferies slashed its price targets for India's state-run oil refiners—Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL), and Indian Oil (IOC)—on February 3, triggering a sharp sell-off. HPCL dropped 7 percent, BPCL slipped 5 percent, and IOC declined over 4 percent as investors reacted to the Budget 2025's lack of provisions to offset under-recoveries for oil marketing companies (OMCs).
State-run railway stocks extended losses, with Rail Vikas Nigam (RVNL), Indian Railway Finance Corporation (IRFC), IRCON International, and RailTel Corporation sliding up to 5 percent. Selling pressure persisted in these stocks following the Union Budget presentation on February 1.
In the broader market, the BSE Smallcap and BSE Midcap indices slid around 1.4 percent each.
On the Nifty 50, Maruti Suzuki, Nestle, Titan, Eicher Motors, and Bajaj Finserv led the gains, rising 1-2 percent, while Bharat Electronics, BPCL, ONGC, Coal India, and L&T tumbled 4-6 percent, dragging the index lower.
Indian benchmarks had closed largely unchanged in the special trading session on February 1 as investors digested the Union Budget. Consumption-linked sectors such as auto, real estate, and consumer goods rallied on personal tax cuts, while capex concerns dampened sentiment in industrials and infrastructure stocks.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
