Indian equity markets plunged sharply on Friday amid weak global cues, triggered by reciprocal tariffs announced by US President Donald Trump. The move sparked a massive selloff in US markets, stoking fears of a recession and a full-blown global trade war. The spillover effects were felt across global equity markets, including India.
The US stock market shed $2.5 trillion on Thursday, with the Dow Jones, S&P 500, and Nasdaq posting their worst single-day losses in five years — since the COVID-19 pandemic.
The Sensex fell 930.67 points or 1.22% to close at 75,364.69, and the Nifty was down 345.65 points or 1.49% at 22,904.45. Broader indices underperformed the benchmarks, with the BSE Midcap index falling 3% and Smallcap index shedding 3.4%. On the sectoral front, the Metal index crashed by 6.5% followed by the Pharma index at 4%. The oil & gas index also fell 4% and the Realty index fell 3.6%.
Investors lost nearly Rs 11 lakh crore as the total market capitalization of BSE-listed firms slumped from Rs 414.2 lakh crore on Thursday to Rs 403.5 lakh crore on Friday.
Trump on Wednesday declared a universal 10% baseline tariff on US imports, calling it "Liberation Day," with reciprocal tariffs starting at that rate. While most countries would face the baseline levy, 60 nations including India would be subject to higher duties, some as steep as 50%. India's exports to the US will now attract a 26% tariff, which Trump described as a "discounted" rate. China, a major US trading partner, faces an increased tariff of 34%.
This move has stoked fears of an all-out global trade war, with retaliatory tariffs expected from China, the EU, and others. On Friday, China’s Finance Ministry announced that starting April 10, Beijing will impose an additional 34% tariff on all US goods — further escalating tensions.
Analysts warn that the escalating trade war could dampen global growth, with spillover effects on India. Economists estimate that the proposed 26% tariffs on Indian exports to the US may slash 30-90 basis points (bps) off India’s GDP growth this fiscal year.
Tanvee Gupta Jain, chief economist at UBS Securities, said, "Our base case GDP growth forecast for FY26 is 6.3%, which already incorporates a 25 bps drag from tariff hikes. However, the sheer magnitude of the newly proposed tariffs suggests further downside risks, potentially lowering growth by another 30-55 bps."
Analysts at Bajaj Broking said investors fear that aggressive trade policies by the US would lead to retaliatory measures from other countries, escalating into a full-scale trade war. Such an outcome could disrupt global supply chains and slow economic growth.
Vinod Nair, Head of Research at Geojit Investments, said that domestically, while the direct impact of these tariffs is relatively moderate compared to other major economies, it remains more substantial than initially projected. “As Q4 approaches, a sequential improvement in corporate performance is anticipated. However, prevailing weak market sentiment suggests that the phase of consolidation may persist in the near term,” added Nair.
