Indian stock market slipped into the red again after a one-day relief rally, as investor anxiety returned on concerns that US negotiations with trading partners on reciprocal tariffs would not result in any positive outcomes.
The RBI repo rate cut for the second consecutive time didn’t lift investor sentiment, as heightened global trade tensions overshadowed the domestic policy support.
Donald Trump on Wendesday hit China with an additional 54% tariff, taking the total tariff rate on goods from the world’s second-largest economy to 104%. The new tariffs on Beijing, along with higher duties on other countries including India, are in place.
With trade tensions persisting, investors continued their selling spree, dragging stocks to multi-month lows. The Nifty 50 ended the session down 0.61%, closing at 22,399 points, while the Sensex also declined by 0.48%, ending at 73,871.
The broader markets also slipped into the red, with the Nifty Midcap 100 index falling 0.61% to close at 49,582 points, while the Nifty Smallcap 100 ended with even higher loss of 0.84% 15,256 points.
Heightened trade tensions and retaliatory measures are also weighing on target price cuts across several sectors. Information technology has been hit the hardest, as the industry is heavily dependent on the US economy for revenue compared to other domestic sectors.
Global brokerage firm Jefferies, in its latest note, cut earnings per share (EPS) estimates for Indian IT companies by 2–14%. Consequently, the firm lowered price targets on several Indian IT stocks, with reductions ranging from 5% to 35%, citing rising uncertainty in the sector.
Earlier, the brokerage firm Kotak Institutional Equities said that shares of Indian IT companies could fall up to 35% if a recession hits the US economy, making the Nifty IT index one of the biggest casualties in the ongoing tariff-led market meltdown.
Earlier, the brokerage firm Kotak Institutional Equities said that shares of Indian IT companies could fall up to 35% if a recession hits the US economy, making the Nifty IT index one of the biggest casualties in the ongoing tariff-led market meltdown.
The index has already lost 12% of its value so far this month, following a 1.16% decline in March and a 12.53% drop in February. Metal stocks have also emerged as another major casualty in the recent market crash, as investor concerns intensified over the impact of US trade tensions on China, one of the world’s largest consumers and producers of metals.
As widely expected, the Reserve Bank, in its first bi-monthly policy meeting of FY 2025–26, announced a 25-basis-point rate cut for the second consecutive time and shifted its stance from 'Neutral' to 'Accommodative'. With a total reduction of 50 basis points over the last two meetings, the RBI has brought the repo rate—the rate at which it lends to commercial banks—down to 6% from 6.5%.
The decline in consumer prices in recent months has given the central bank the confidence to proceed with a second rate cut. On the inflation front, the RBI said that prices are expected to remain under control in FY 2025–26, amid easing vegetable prices, which prompted the bank to lower its inflation projection for FY26 to 4%, assuming a normal monsoon.
However, the RBI has revised its growth forecast for FY26 downward to 6.5% from 6.7%, citing heightened tariff tensions.
(By arrangement with livemint.com)
