Indian stock indices showed tepid response to U.S. President Donald Trump’s reciprocal tariff action on Thursday as investors factored in the higher impact of tariffs on other Asian countries like China, Vietnam and Thailand rather than on India.
With the realisation of relatively lower tariff rate on India, frontline indices recovered during the day and closed with a loss of 0.4% compared with 0.3% slide in China, 1.5% in Hong Kong, 1% in Thailand and 6.7% in Vietnam.
Nandish Shah – deputy vice-president, HDFC Securities said, “The Nifty opened sharply lower by 182 points, reacting to President Trump’s unexpectedly stringent tariffs. However, the index demonstrated remarkable resilience, quickly recouping most of its losses in the first half of the trading session.”
“Post 11 a.m., the Nifty traded within a narrow range, ultimately closing the weekly expiry down 82 points (0.35%) at 23,250. NSE cash market volumes increased by 13% compared to the previous day,” he said.
The S&P BSE Sensex closed with a loss of 322 points, or 0.42%, at 76,295.
Sectorally, Pharma, Healthcare, and PSU Banks were the top performers, while IT, Auto, and Metals experienced the most significant losses.
“Markets had priced in most of the effects of Trump tariff. Investors have received a much needed clarity regarding the Trump tariff. This was not there before which led to the volatility,” said Shrikant Chouhan, Head of Research at Kotak Securities.
“It was already known this was happening. In the short term, foreign investments that exited India to invest more into U.S. may start coming back, with Asian currencies appreciating,” he added,
The Indian rupee initially weakened, falling 26 paise to 85.78 against the U.S. dollar amid the tariff news. However, it subsequently recovered, supported by a weakening dollar index and stable equity markets. The rupee closed the day with a 22-paise gain at 85.30, its strongest close since December 26, 2024.
Mid and small-cap indices continued to outperform the broader market. The Nifty Midcap 100, despite opening lower, staged a strong recovery, closing 0.21% higher.
The Nifty Smallcap 100 also rebounded significantly from its intraday lows, finishing with a 0.58% gain. Market breadth remained positive for the third consecutive day, with the BSE advance-decline ratio at 2.40.
While stock markets reacted moderately to the, Indian rupee to appreciated amid tariff action.
Indian rupee appreciated 0.15% to ₹85.3 a dollar on April 3 2025, following the tariff announcement. The appreciation was mostly due to depreciating U.S. currency as reflected by the dip in dollar index to 101.58 on April 3 from 103 the previous day and Asian currencies became more attractive, said Dilip Parmar, Research Analyst at HDFC Securities.
The U.S. dollar depreciated due to uncertainties about the growth that would come in from tariffs. “The reason behind the dollar weakness is that after the reciprocal trade, there is a probability of recession is higher in the U.S. And if the recession comes along with inflation, that is a bad combination for the U.S. economy. Due to that, the currency has depreciated” said Mr. Parmar. To be sure, the local currency has been in the appreciation territory for a week now, due to continuous liquidity injection by the Reserve Bank of India.
Published – April 03, 2025 09:02 pm IST
