Indian markets tumble as IT and banking stocks drag indices lower

Indian equity markets extended their losses for a second consecutive session on Tuesday, 1 April, with the Sensex and Nifty tumbling sharply, weighed down by IT and banking stocks. Investor sentiment remained fragile amid concerns over US President Donald Trump’s push for sweeping reciprocal tariffs.

The BSE Sensex plunged over 1,300 points, slipping below 76,100, while the Nifty50 fell below the 23,200 mark by midday. Barring the auto sector, all major indices were in the red, with Nifty IT, Realty, Financials, and Consumer Durables losing between 1 and 3 per cent.

Market capitalisation of all listed firms on the BSE declined by Rs 1.25 lakh crore to Rs 411.62 lakh crore, reflecting the widespread market weakness.

The market sentiments is a reflection of investor apprehension which has intensified ahead of 2 April, termed “Liberation Day” by Trump, when he is expected to announce broad-based reciprocal tariffs. Over the weekend, Trump signalled that these measures would target all countries, not just those with significant trade imbalances, fuelling fears of a global trade war.

“Global markets are keenly awaiting details of Trump’s reciprocal tariffs. The market trajectory post-announcement will hinge on how these tariffs impact different sectors and economies,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited in a statement.

IT firms, which rely heavily on the US market, faced selling pressure, with the sector falling by 1.8 per cent. The IT index has already shed 15 per cent in the March quarter, dragging the Nifty50 lower.

Morgan Stanley analysts indicated a subdued outlook for the sector, stating, “We expect the FY26 revenue projections for IT companies to be in line with expectations or disappointing, with downside risks persisting for earnings.”

Crude oil prices hovered near a five-week high, intensifying inflationary concerns. Brent crude traded at approximately $74.67 per barrel, while US West Texas Intermediate (WTI) stood at $71.37. Elevated oil prices are expected to exert pressure on India’s fiscal deficit and corporate profit margins.

Following an impressive 5.4 per cent surge over the past eight sessions, the market witnessed profit booking, leading to a correction. The sharp rise in valuations within a short span has made traders cautious, prompting a sell-off in heavyweight stocks.

“India outperformed most markets in March with a 6.3 per cent return, driven by foreign institutional investors (FIIs) turning buyers and subsequent short covering. Whether the rally continues or another downturn occurs will depend largely on Trump’s tariff announcement. A less aggressive tariff stance may spur a market rally led by externally linked sectors such as pharmaceuticals and IT, whereas severe tariffs could trigger further declines,” Vijayakumar added.

Among the worst-performing stocks on the Sensex were Bajaj Finserv, Infosys, HDFC Bank, Bajaj Finance, Axis Bank, HCL Tech, TCS, Sun Pharma, and Titan, which shed up to 3 per cent in early trade.

On the BSE, 51 stocks scaled their 52-week highs, whereas 157 touched their 52-week lows, highlighting weak market sentiment. Of the 3,869 stocks traded, 2,372 were in the green, 1,311 in the red, and 186 remained unchanged.

The BSE midcap index slipped 382 points to 41,144, reflecting weakness in the broader market, while the small-cap index fell 50 points to 46,588.

Additionally, 172 stocks hit their lower circuits as the market plummeted in morning trade, while 238 stocks reached their upper circuits despite the weak sentiment.

Foreign institutional investors (FIIs) offloaded equities worth Rs 4,352.82 crore on a net basis on Friday, whereas domestic institutional investors (DIIs) purchased shares worth Rs 7,646 crore, according to provisional NSE data.

On Monday, the Sensex had declined by 191.51 points to 77,414, while the Nifty slipped 72 points to 23,519.

As investors brace for Trump’s tariff announcement, market direction will be dictated by global developments. If tariffs are harsher than anticipated, another wave of selling could grip the market. Conversely, any relief on that front may stabilise sentiment and potentially trigger a rebound.