Market Overview

The Indian equity markets faced a turbulent start in Tuesday’s trade, with both the Nifty 50 and Sensex opening in the red. Nifty 50 slipped below 23,400, while Sensex fell by over 500 points to touch 76,870. Despite this decline, broader markets exhibited resilience and outperformed the benchmark indices. Investors closely monitored key global and domestic factors influencing the stock market movements.

Key Factors Influencing the Market

Several critical factors are shaping the direction of the stock market:

1. US Tariffs and Global Trade Concerns

A major global development impacting the markets is the announcement by former US President Donald Trump regarding new tariffs. Trump declared that the United States would impose a uniform global tariff on all countries starting Wednesday, April 2, referring to the day as “Liberation Day.”

Trump’s move towards protectionist trade policies has sparked uncertainties across global markets. While the precise impact on India’s exports remains to be seen, sectors such as information technology, pharmaceuticals, and automobiles may experience headwinds if the US raises import duties on Indian goods. Investors are cautiously evaluating the repercussions of this policy.

2. Global Market Trends

Global stock markets displayed positive momentum despite the concerns over US tariffs. On Monday and early Tuesday, major equity indices across the world traded higher, with the US stock market closing on a positive note.

Asian-Pacific markets also followed suit, opening Tuesday’s session on an optimistic note. The performance of global indices is expected to have a spillover effect on the Indian markets in the coming days. Investors are keenly awaiting further details on Trump’s reciprocal tariffs to assess their broader impact.

3. RBI Monetary Policy Announcement

Domestically, market participants are eagerly awaiting the Reserve Bank of India’s (RBI) upcoming monetary policy decision. The RBI’s Monetary Policy Committee (MPC) is set to convene between April 7-9.

There is widespread consensus that the central bank may announce a 25 basis points (bps) rate cut to support economic growth. Additionally, the RBI is likely to maintain an accommodative stance by ensuring sufficient liquidity in the financial system.

Market analysts will also closely watch the RBI’s projections for GDP growth and inflation for the fiscal year 2025-26. Any downward revision in GDP estimates or upward revision in inflation forecasts could influence market sentiment.

Sectoral Impact

1. Banking and Financial Services

The banking sector remains a focal point as any changes in RBI’s monetary policy will directly impact banks’ lending rates and profitability. A rate cut could lead to a boost in lending activity, benefiting stocks of major banks and non-banking financial companies (NBFCs).

However, concerns over rising non-performing assets (NPAs) continue to weigh on investor confidence. Private sector banks such as HDFC Bank, ICICI Bank, and Axis Bank are likely to witness heightened trading activity ahead of the policy announcement.

2. IT and Export-Oriented Sectors

The IT sector is under scrutiny due to global trade developments. Indian IT giants such as Infosys, TCS, and Wipro derive a significant portion of their revenue from the US market. If Trump’s tariff policies adversely affect outsourcing, IT stocks could witness volatility in the coming sessions.

Similarly, pharmaceutical exports to the US may also come under pressure, impacting companies like Sun Pharma, Dr. Reddy’s, and Cipla.

3. Auto Sector

The auto sector, which is already grappling with high input costs and changing emission norms, is closely monitoring the RBI’s stance on interest rates. A rate cut could help stimulate demand for vehicles by making auto loans more affordable. Stocks of Maruti Suzuki, Tata Motors, and Mahindra & Mahindra remain in focus.

Market Technical Analysis

From a technical perspective, analysts note that Nifty 50 is finding support at the 23,400 level, with resistance near 23,600. If the index manages to sustain above this range, further upside momentum can be expected.

Sensex, on the other hand, is witnessing resistance near the 77,000 mark. Market breadth continues to be positive, suggesting that mid-cap and small-cap stocks are outperforming large-cap stocks.

Investor Strategy and Outlook

Given the current market scenario, investors are advised to adopt a balanced approach:

  • Long-term investors should focus on quality stocks in sectors like banking, IT, and FMCG, which tend to perform well in volatile markets.

  • Short-term traders may look for opportunities in sectoral rotation, particularly in banking and auto stocks, ahead of the RBI policy announcement.

  • Defensive sectors, such as pharmaceuticals and FMCG, may provide stability amid uncertainties related to US tariffs and global trade tensions.