Trump's 26 Per Cent Tariff On India Triggers Sell-Off In Sensex And Nifty: IT Worst Hit, Pharma Top Sectoral Gainer

India’s equity market woke up on April 3 to a sea of red as Sensex opened gap-down by over 800 points after US President Donald Trump announced a 26 per cent tariff on Indian goods. The 30-share index opened at 75,811.86, down 805.58 points, or 1.05 per cent against the previous close, weighed down primarily by IT stocks.

Likewise, Nifty 50 too started with a gap-down of 182.05 points, or 0.78 per cent, at 23,150.30. However, as the day progressed, the market quickly absorbed more than half of the early sell-off, as of 11 AM.

Trump’s 'Discounted' Reciprocal Tariffs On India

In the wee hours on Thursday, President Trump announced the much-dreaded reciprocal tariffs on India, China and other countries, as anticipated. While making the announcement, he said he is being kind to them by charging roughly "half of what they charge us", and referred to these as "discounted reciprocal tariffs".

“India charges us 52 per cent, so we will charge them half of that - 26 per cent," said Trump.

VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted that the worse-than-expected tariffs announced by President Trump could have a negative impact on global markets. He expressed concern that these tariffs could provoke retaliatory measures from other countries, potentially leading to a full-blown trade war that would hurt global trade and economic growth.

He also pointed out that higher inflation in the US might put the Federal Reserve in a tough spot, making it harder for them to implement the rate cuts the market expects in 2025. The chances of a US recession by the end of 2025 have also increased, which is concerning for both the global economy and markets, he added.

Top Gainers And Losers In Sensex

In early trade Tech Mahindra, HCL Technologies, Tata Consultancy Services (TCS), Infosys, Bajaj Finance and Tata Motors emerged as the top losers.

On the other hand, Sun Pharma led the gains, rising 5.8 per cent in early trade. Following the pharma major were UltraTech Cement, PowerGrid, IndusInd Bank, Titan, and NTPC.

Pharma Sees Relief, IT Top Sectoral Loser

Nifty Pharma emerged as the top sectoral gainer, jumping as much as 5 per cent in early trade, led by rallies in Ipca Laboratories, Gland Pharma, Sun Pharma, Cipla, and Natco Pharma. All the constituents of the pharma index were in green, as of the time of writing this report.

The strong rally in pharma stocks came as the Trump administration kept the pharma under its exempted list of 50 items, which means the sector will not face tariffs for now. Earlier, there were fears that Trump could impose as much as 35 per cent tariffs on India-made generic drugs.

There were earlier fears that the US could impose as much as 35 per cent tariff on domestic generic drug makers. However the fact sheet issued by the White House cited pharma in the exempted list of 50 items.

On the other hand, Nifty IT was the top sectoral loser, falling up to 3.5 per cent. The tech-focussed index was dragged by Persistent Systems, which fell over 9 per cent, and Coforge, which dropped over 7 per cent.

Though Trump’s tariffs do not have a direct impact on the IT sector, they could lead to higher inflation in the US. If inflation goes up, US companies might want to reduce their tech spending. This could impact Indian IT firms, which rely heavily on US clients for business.

Broader Market Mirrors Benchmarks

The broader markets also mirrored the benchmark indices as Nifty Smallcap 100 slipped as much as 0.85 per cent in early trade. Likewise, Nifty Midcap 100 too cracked over 0.9 per cent. However, both the broad market indices regained some ground as the day progressed, though still trading in the red.

The smallcap index trades 18 per cent lower than its record high and the midcap index is nearly 15 per cent lower from its lifetime high.