Sensex, Nifty overcome Trump's tariff shock; where's the market headed ?

The Indian stock market recovered partially from the initial jitters of the April 2 tariff shock on Thursday. Sensex and Nifty closed lower, accounting for losses in the IT and auto sectors stocks-seen the most impacted by the tariff of 27% levied by the Trump administration on India. IT shares were the top Sensex and sectoral losers over fears of recession as experts see additional tariffs detrimental to the economic growth in the US. This would impact demand for services of Indian IT companies in that country. 

The Nifty IT index closed 4.21% or 1526 pts lower, tracking weakness in global markets and fears of reduced demand for IT services.

The BSE IT index was the top sectoral loser, falling 1348 points to 34,293 against the previous close of 35,642. 

Shares of Infosys (3.41%), TCS (3.98%), Tech Mahindra (3.79%) and HCL Technologies (3.71%) were the top losers on Sensex. 

The 30-stock index, which slipped 810 pts in early deals today, recovered a majority of ground to close 322 pts lower at 76,295. Analysts attributed the recovery in market to the limited impact of tariffs on the Indian economy with some even suggesting the 27% tariff was much lower than that imposed on Vietnam (46%), China (34%) and Taiwan (32%), giving India a competitive advantage over others. 

On similar lines, Nifty ended 82 points lower at 23,250. In early deals, the 50-stock index slipped 187 points to 23,145. 

The BSE auto index closed 548 pts lower at 47,412 as Indian exporters (auto and auto ancilliary) are expected to take a hit due to Trump tariffs. 

Shares of Bharat Forge, Bajaj Auto, Balkrishna Industries, Tata Motors, Samvardhana Motherson International, Tube Investments of India, TVS Motor, Ashok Leyland and MRF came under selling pressure on Thursday. 

Of 30 Sensex stocks, 17 shares ended in the red. 

PowerGrid, Sun Pharma, UltraTech Cement, NTPC, Asian Paints and Nestle were the top Sensex gainers, rising up to 4.34%. 

Investor wealth rose by Rs 0.33 lakh crore to Rs 413.33 lakh crore today against Rs 412.98 lakh crore in the previous session. 

Nandish Shah - Deputy Vice President, HDFC Securities said, "For the last three consecutive sessions, Nifty has been finding support at 20 and 50 days EMA, both placed at 23129. From the recent swing high, Nifty corrected more than 750 points, which resulted in completion of 38.2% retracement of the entire rally seen from 21964 to 23869. A level below 23129 could drag Nifty towards the next support level of 22917, which happens to be 50% retracement level. On the upside, any level above 23400 could lead to the resumption of an uptrend, which could extend the rally towards next upside target of 23650."

Commenting on the technical outlook of Nifty, Shrikant Chouhan, Head Equity Research, Kotak Securities said, "Technically, after a gap down opening, the market found support near 23150/75800 and reversed. However, it failed to surpass the 23350/77000 resistance zone, which is largely negative. We believe that the market is currently experiencing non-directional activity. On the downside, it is consistently finding support near 23150/75800, while profit booking is occurring near the 23350/77000 zone. For short-term traders, 23350/77000 is now the key level to watch. If the index moves above this level, the bounce back could continue up to 23500-23600/77500-77800. Conversely, if it falls below 23150/75800, selling pressure could intensify, potentially leading the market to retest levels around 23000-22950/75500-75300."

Ajit Mishra – SVP, Research, Religare Broking is of the view that investors should focus on specific stocks while pouring money. 

"The market’s measured response to the US tariffs reflects expectations of ongoing trade discussions between India and the US, as well as the possibility of higher tariffs impacting other countries more significantly, limiting the impact on Indian exports. From a technical perspective, traders should closely monitor the 20-day exponential moving average (DEMA) at 23,100. A break below this level could intensify selling pressure, potentially dragging the index toward 22,800. Conversely, holding above this level would likely sustain the range-bound movement. Amid this consolidation, selective pockets across sectors are showing strength. Until a clear directional move emerges, the focus should remain on stock-specific opportunities," said Mishra. 

Rohit Murarka, Business Head, Kotak Cherry said, "The US makes up around 17% of India's exports, its largest market. Short-term impacts may cause market volatility and export disruptions, but long-term, it pushes India to diversify markets, negotiate new trade deals, and strengthen global competitiveness."

As many as 72 stocks hit their 52-week highs today. On the other hand, 52 shares fell to their 52-week lows on BSE. 

BSE midcap index rose 128 pts to 41,796. BSE small cap stock index too climbed 358 pts to 47,494 level. Out of 4,123 stocks traded, 2813 stocks ended in the green on BSE. Around 1169 stocks were in the red while 141 stocks remained unchanged.

Around 8 stocks hit their lower circuits even as the stock market saw a partial recovery rally today. On the other hand, 5 shares hit their upper circuit limits 

Previous Session 

Sensex climbed 593 points to 76,617 and Nifty rose 162 points to close at 23,332. Investor wealth rose by Rs 3.51 lakh crore to Rs 412.98 lakh crore on Wednesday against Rs 409.47 lakh crore in the previous session.