Indian Stock Market Opens Lower as Global Markets Tumble Following Trump’s Tariff

The Indian stock market opened sharply lower on Monday, February 3, 2025, as global markets reacted negatively to US President Donald Trump’s announcement of new trade tariffs.

The tariffs, which are set to come into effect on Tuesday, have raised concerns about their impact on global trade and economic growth, leading to widespread sell-offs across Asia and other international markets.

Market Opening: Sensex and Nifty Decline

At around 9:33 a.m. IST, the domestic benchmark indices, Sensex and Nifty, opened with significant losses. The Sensex was trading over 400 points lower at 77,103.22, while the Nifty was down by 154 points, trading at 23,328.00.

The market saw a sharp drop at the opening bell, with the Sensex shedding 710 points, or 0.88%, to reach 76,821.50.

On the National Stock Exchange (NSE), all major sectors experienced a decline, with the Nifty Metal and Nifty Realty indices emerging as the worst performers.

The negative sentiment spread across sectors, reflecting investor concerns over the global economic outlook amid the escalating trade war between the US and key trading partners.

Asian Markets React to Trump’s Tariffs

The ripple effect of Trump’s tariff announcement was felt across Asian markets, which all opened lower on Monday. Hong Kong’s Hang Seng Index dropped 1.3%, Japan’s Nikkei 225 fell by 2.4%, South Korea’s KOSPI tumbled 3%, and Australia’s ASX 200 saw a 1.8% decline.

These declines were largely driven by the uncertainty surrounding the imposition of new trade tariffs by the US on countries like Mexico, Canada, and China, as well as the potential for similar measures against the European Union.

Trump’s Tariff Announcement

On Saturday (US time), President Trump made a significant announcement stating that the US would impose 25% tariffs on imports from Canada and Mexico, and 10% tariffs on goods from China, beginning Tuesday.

Trump also indicated that new tariffs would be placed on goods imported from the European Union. These announcements have shaken investor confidence, leading to a sharp sell-off in global markets.

The US equity futures also experienced a sharp decline following Trump’s tariff decision, adding to concerns about the potential economic fallout.

The market reactions reflect widespread skepticism about the long-term economic consequences of the tariffs, especially as they are expected to increase the cost of goods and disrupt global supply chains.

Nifty and Rupee Outlook

After the negative opening, analysts suggest that Nifty could find support at levels around 23,200, followed by 23,100 and 23,000. On the upside, immediate resistance is expected at 23,500, followed by 23,600 and 23,700. However, market participants are wary about the volatility that could follow as the day progresses.

Meanwhile, the Indian rupee opened 41 paise lower at 87.02 against the US Dollar, continuing its downward trajectory from Friday when it closed at 86.61.

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The rupee’s decline reflects broader concerns about the potential impact of the US tariffs on the Indian economy and global trade flows.

Global Market Volatility: Asia Braces for Impact

According to Vikram Kasat, Head of Advisory at PL Capital-Prabhudas Lilladher, the global market volatility that began in Asia on Monday is expected to continue throughout the day as investors react to Trump’s tariff policies.

“It will be fascinating to see how investors react to something they have known was coming and which is almost universally seen as damaging for economic growth and financial assets. They won’t be surprised, but they will still be shocked,” Kasat noted.

The uncertainty surrounding the new tariffs has led to widespread concern among foreign institutional investors (FIIs), who remained net sellers on February 1, offloading equities worth Rs 1,327 crore. Meanwhile, domestic institutional investors (DIIs) were active buyers, purchasing equities worth Rs 824 crore during the same period.

Gold and Silver Market Volatility

Amidst the market turbulence, commodities like gold and silver have also seen increased volatility. Last week, both precious metals experienced significant price fluctuations, slipping from their highs due to the strengthening of the US dollar and the onset of the US trade tariff war.

However, gold and silver are holding key support levels, with gold maintaining a crucial support level at $2,722 per troy ounce, and silver holding at $30.20 per troy ounce in international markets, according to Rahul Kalantri, VP of Commodities at Mehta Equities Ltd.