Trump Tariffs Impact Stock Market as Sensex Nifty Drop

Introduction

The global financial markets have been sent into a tailspin following US President Donald Trump's announcement of reciprocal tariffs on key trading partners, including India. The ripple effect of these tariffs has been immediate, with indices across the world, including the Dow Jones, Nasdaq, Sensex, and Nifty 50, witnessing sharp declines.

For Indian markets, the IT sector has taken the biggest hit, while pharma stocks have shown resilience. This blog explores how Trump's tariffs have impacted Indian markets, which sectors have been affected the most, and what investors can expect in the coming weeks.

Stock Markets React: A Tale of Volatility

1. A Rough Start to FY26

The first week of FY26 has been turbulent, with Sensex and Nifty slipping significantly. The Sensex plunged by 1,391 points, while Nifty fell below 23,200, marking one of the worst starts to a financial year in recent history.

2. IT Stocks Lead the Decline

One of the hardest-hit sectors has been the Indian IT industry, which depends heavily on the US market. Mid-cap IT companies such as Persistent Systems and Coforge have fallen by over 10%, while large-cap players like TCS, Infosys, and Wipro have collectively lost over ₹1 lakh crore in market capitalization. The Nifty IT index has declined by 17% in 2025 alone, indicating a tough road ahead for the sector.

3. Pharma Stocks Shine Amid Market Uncertainty

On the flip side, pharma stocks have been a rare bright spot in an otherwise gloomy market. The announcement of tariff exemptions for select pharmaceutical products has bolstered investor confidence, pushing stocks like Sun Pharma and Cipla into positive territory.

4. Global Sell-Off Intensifies Pressure

Indian markets are not alone in this turmoil. The US stock markets saw their worst one-day fall since 2020, with the Dow Jones tumbling by over 1,200 points. Asian and European markets also experienced sharp declines, further exacerbating investor concerns.

Key Factors Driving the Market Downturn

1. Trump's Aggressive Trade Policies

The tariffs announced by the Trump administration aim to impose higher duties on imports from several nations, including India. The move is being seen as a protectionist measure, designed to strengthen domestic manufacturing in the US but with significant consequences for global trade.

2. Fears of an Economic Slowdown

Markets are reacting not just to the immediate tariff impact but also to the possibility of an economic slowdown. Higher tariffs could lead to reduced export revenues for Indian companies, particularly in the IT and automobile sectors.

3. Weak Global Cues and Sell-Off in US Markets

The market downturn has been exacerbated by global uncertainty. US inflation concerns, a strengthening dollar, and rising bond yields have all contributed to the negative sentiment in equity markets worldwide.

4. Sector-Specific Reactions

• IT Stocks: Witnessed a bloodbath as higher tariffs could impact outsourcing revenue.
• Pharma Stocks: Benefited from exemptions, outperforming other sectors.
• Banking and Financials: Showed mixed reactions, with some banks recovering towards the end of the trading session.
• Energy & Infrastructure: Oil price volatility and global slowdown fears pressured stocks in these sectors.

Investor Sentiment: What Lies Ahead?

1. Market Volatility Likely to Continue

Experts believe that volatility will remain high in the short term, especially as global markets continue to adjust to the tariff implications. Investors should brace for further fluctuations as more details emerge on the tariff impact.

2. Long-Term Investors Should Stay Cautious

For long-term investors, staying diversified and avoiding panic selling is crucial. Sectors like pharma, FMCG, and renewable energy could offer stability amid uncertainty.

3. IT Sector Needs Policy Support

Given the importance of the IT sector to India's economy, the government may need to step in with policy interventions to help Indian IT firms navigate the tariff impact.

Conclusion

Trump's tariffs have delivered a shockwave to global markets, and Indian equities have not been spared. While IT stocks continue to bleed, pharma stocks have provided a cushion. Investors must remain cautious, focus on long-term fundamentals, and keep an eye on further developments from the US administration.

As the dust settles, the big question remains—can India’s stock market weather this storm and emerge stronger? Only time will tell.