Donald Trump (File Image)
On February 3, 2025, India's stock market witnessed a sharp downturn following U.S. President Donald Trump's announcement of new tariffs. Trump declared tariffs on major trade partners such as China, Canada, and Mexico, sparking a ripple effect across global markets, including India. The move led to heightened uncertainty among investors, making this a challenging time for the Indian stock market.
The announcement had an immediate and notable impact on India's stock markets. The NSE Nifty 50 saw a decline of 0.52%, closing at 23,361.05, while the BSE Sensex dropped by 0.4%, ending at 77,192.86. This decline mirrored the global market downturn, as the U.S. stock markets also faced significant losses. The Dow Jones Industrial Average fell by 546 points (1.22%), while the S&P 500 and Nasdaq 100 dropped by 1.4% and 1.7%, respectively.
According to market experts, Trump's tariff imposition could escalate the ongoing global trade war, worsening the already fragile global economic conditions.
Prashant Tapse, Senior VP (Research) at Mehta Equities, explained that the new tariffs introduced by Trump have contributed to a market slowdown worldwide. He noted, "This move may exacerbate negative sentiment among investors, potentially leading to heavy selling in mid and small-cap stocks." Additionally, the Indian rupee is weakening against the U.S. dollar, which may make it harder to attract foreign investments.
Potential Global Economic Setbacks
Vinod Nair, Head of Research at Geojit Financial Services, emphasized that the new trade war could deepen global economic challenges. "This shift in international trade policies could lead to higher global inflation and interest rates, making it difficult for economies to recover," he said.
Ajit Mishra, SVP, Research at Religare Broking, stated that the Indian stock market ended the day weak due to global signals. "Though certain sectors like IT and pharma saw slight gains, energy, metals, and FMCG sectors experienced losses," he added. He advised investors to remain cautious and manage their positions carefully.
Rupak De, Senior Technical Analyst at LKP Securities, mentioned that some volatility remains in the Nifty index. He stated, "Although Nifty closed above the 21 EMA, the situation is still fragile. Support levels for Nifty are around 23,200/23,100, while resistance is at 23,400."
Experts are advising investors to stay balanced and consider the risks involved. In light of the market volatility, they suggest focusing on long-term investments rather than attempting short-term gains. Diversifying portfolios and investing in companies with strong fundamentals and management remains key for investors during this uncertain period.
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