The Nifty 50 index declined by 3.24% to 22,161.1 points, while the BSE Sensex dropped 2.95% to 73,137.9 points. These downturns were primarily driven by escalating global trade tensions and fears of a potential recession, following the introduction of new U.S. tariffs by President Donald Trump. The tariffs have intensified concerns over a prolonged trade war, prompting investors to reassess their positions in emerging markets, including India.
The Nifty volatility index surged by 66%, marking its most significant single-session increase in a decade. All 13 major sectors within the Indian market experienced declines, with notable losses in the information technology sector , metals , and financials . Major stocks such as HDFC Bank, ICICI Bank, and Reliance Industries each fell approximately 3.5%. Additionally, the broader small-cap and mid-cap indices recorded their worst session in nearly three months.
Analysts attribute the sell-off to investor apprehensions regarding prolonged trade disputes and diminishing global liquidity. There are growing concerns that India's GDP growth for the fiscal year 2025-2026 could be adversely affected, despite government assurances to the contrary. Specific companies faced significant setbacks; for instance, Trent's shares plummeted by 15% due to weakening revenues, and Tata Motors declined by 5.6% following the suspension of its U.S. exports.
The Indian rupee is projected to open significantly weaker, influenced by the sharp sell-off in Asian equity markets and escalating concerns over new U.S. tariffs. One-month non-deliverable forwards suggest the rupee will open at 85.75-85.80 per U.S. dollar, down from the previous session's 85.2350. Market analysts attribute the rupee's downturn to global risk aversion, as investors react to President Trump's refusal to negotiate on tariffs with China until the trade deficit is addressed.
This broader market turmoil has affected global indices, with Asia ex-Japan down 8.3%, Japan's Nikkei 225 falling 7.8%, and European indices like Germany’s DAX and the UK’s FTSE dropping 5.3% and 4.1% respectively. Safe-haven assets such as U.S. Treasuries and the Japanese yen have seen increased demand, leading to lower yields and currency gains. Brent crude prices have also fallen nearly 3% to $63.7 per barrel.
Foreign investors had previously shown interest in India's financial sector, injecting ₹175.85 billion in March 2025, which accounted for two-thirds of the total $3.05 billion inflows during that period. This marked the largest biweekly influx in 15 months and drove a 9% gain in the Nifty Financial Services Index—its best monthly performance since July 2022. However, despite the March recovery, the fiscal year 2025 closed with net FPI outflows of $14.6 billion—the second-highest annual outflow on record—as investors reversed positions in the second half due to subdued earnings growth and high valuations compared to other emerging markets.