Sensex, Nifty Start Lower Amid Escalating Tariff Tensions and Awaited RBI Decision

Indian equity markets opened in the red on Wednesday, tracking global declines, as tensions surrounding global tariffs intensified and investors awaited the Reserve Bank of India’s (RBI) monetary policy committee (MPC) decisions.

Sensex and Nifty Fall as Tariff Threats Escalate

In early trade, the Sensex was down 302 points, or 0.41%, at 73,939, while the Nifty fell by 107 points, or 0.48%, to 22,433. The market sentiment was dampened following US President Donald Trump’s threat of reciprocal tariffs on the global pharmaceutical sector, which added pressure on the global equity markets.

The losses were not limited to large-cap stocks, as mid-cap and small-cap indices also witnessed declines. The Nifty midcap 100 index fell by 436 points (0.87%) to 49,402, and the Nifty smallcap 100 index dropped 150 points (0.98%) to 15,238 in the early session.

Sectoral Performance: Auto and FMCG Gain, IT and Pharma Lag

On the sectoral front, auto, FMCG, and consumption stocks emerged as major gainers, while IT, PSU Bank, pharma, metal, realty, infra, and commodities stocks witnessed significant losses. Among the top gainers in the Sensex pack were Power Grid, Nestle, HUL, M&M, ITC, Asian Paints, and Bharti Airtel. Meanwhile, Maruti Suzuki, Bajaj Finserv, Tata Steel, Tech Mahindra, Infosys, HCL Tech, and TCS were among the biggest losers.

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Anticipation of RBI MPC Decisions

Investors are also focused on the upcoming decisions of the RBI’s monetary policy committee. A 25 basis points (bps) cut in the repo rate is expected, along with a shift in the RBI’s stance from ‘neutral’ to ‘accommodative.’ Market analysts are closely watching these developments to gauge the central bank’s response to the current economic conditions.

Devarsh Vakil, Head of Prime Research at HDFC Securities, stated, “We expect the markets to remain volatile today, as traders navigate the weekly derivative expiry.” He added that foreign portfolio investors (FPIs) had purchased index options the previous day, signaling their anticipation of increased market volatility.

Global Markets Impacted by Tariff Concerns

The negative sentiment in Indian markets was in line with the global trend, as major Asian markets, including Tokyo, Hong Kong, and Seoul, were all in the red. On Tuesday, US markets also closed lower amid growing fears of a recession.

The escalating trade tensions between the US and China also contributed to the bearish outlook. The US has announced plans to impose an additional 50% tariff on imports from China, bringing the total tariff rate on Chinese goods to 104%. This has heightened recession fears and created further uncertainty in the global economic landscape.

As the tariff threats intensify and investors await key decisions from the RBI, market volatility is expected to remain high in the short term.