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Informist, Thursday, Apr. 3, 2025

 

By Gopika Balsubramanium

 

MUMBAI – Benchmark indices ended 0.4% lower Thursday after US President Donald Trump announced higher-than-expected tariffs but it managed to perform better than several of its peers in Asia and Europe, where equity markets fell over 2%. Information technology stocks saw a sharp sell-off amid concerns that these tariffs would hurt growth in the US, but this was offset by gains in pharmaceutical stocks, which rose after the US exempted pharmaceutical products from reciprocal tariffs.

 

The fall in the market was limited as investors likely believe India can negotiate for lower tariffs through a bilateral trade deal, said a senior vice-president of research at a Mumbai-based brokerage. Market watchers also said there is a silver lining amid the tariff threat as higher tariffs on other Asian countries such as China, Vietnam, and Bangladesh may prove to be beneficial for Indian companies.

 

The Nifty 50 closed at 23250.10 points and the BSE Sensex closed at 76295.36 points, both down 0.4%. Indices had opened sharply lower but came off lows later. The mid- and small-cap indices had slipped into the red for a while but recouped those losses and closed slightly higher. The Nifty Smallcap 250 closed 0.7% higher and the Nifty Midcap 150 ended 0.2% higher. 

 

Several stocks during the day came off lows as there are hopes India will strike a trade deal with the US. Also, India is not heavily dependent on the US for exports and the domestic economy is strong, analysts said.

 

However, information technology stocks were not spared as tariffs are likely to hurt growth in the US, which will impact demand for IT services in the US. The US would have to pay the price for levying tariffs on countries around the world, even when the intention was to protect its own economy, said the senior vice-president quoted above. The inflationary impact cannot be avoided and the fall in consumer spending due to costlier imports will translate into a slowdown in US economy, and at worse it could even lead to stagflatio-like situation in US, he said.

 

The Nifty IT closed 4.2% lower at 34757.25 points, its lowest level in over nine months. All the 10 stocks in the index closed lower. Coforge, HCL Technologies, Infosys, and LTIMindtree fell 3.5-8.0%. Nomura Global Markets Research cut the 2025-26 (Apr-Mar) sales growth outlook for large-cap information technology companies by 230-350 basis points. "Rising macro uncertainty due to tariff concerns in the US is likely to slow decision-making of clients and hence impact the pace of revenue growth improvement in FY26 for Indian IT companies in general," Nomura said in its report. The brokerage also cut the target prices for Tech Mahindra, Wipro, and Infosys by 2-21% but retained its "buy" rating on the stocks.

 

"Notably, the US economy has weakened in recent months. Naturally, the deterioration in the macro environment will weigh on Q4FY25 (Jan-Mar) numbers and FY26E guidance," said Sumit Pokharna, vice-president of fundamental research at Kotak Securities, in a note, while talking about the information technology sector. There could a sequential revenue decline for all large Indian IT service companies for the March quarter due to seasonal weakness, lower billing days, and marginal deterioration in demand, he said.

 

Any imposition of retaliatory tariffs on the US exports by its trading partners could add to global inflation, which had turned benign, Pokharna said. "Higher tariffs may result in higher inflation (versus the 2% target of the US Fed) and may impact the Fed's rate cut decision which is not conducive for the IT sector, in general," he said.

 

Thursday, the Nifty Auto index also saw sharp decline with the index down 1.1% at 21164 points. For the sectoral indiex, 13 of the 15 stocks closed lower. Shares of auto-ancillary companies such as Balkrishna Industries, Bharat Forge, and Samvardhana Motherson International ended down 3.3-2.5%.

 

Almost 150 automobile parts imported to the US will face a 25% tariff, said Arun Agarwal, research analyst at Kotak Securities. This move could result in increase in car prices in the US and cost pressure for component suppliers, he said.

 

With the car prices going up, the US car market may witness a steep volume decline and that can impact revenue for component players supplying parts to the US car or light truck industry, he said. Further, margins of suppliers may come under pressure as they may need to partly absorb cost pressures, he said. 

 

Shares of Tata Motors closed 2.7% lower, which is expected to take hit from the tariffs. ICICI Direct said in a note that Tata Motors may benefit from lower tariffs on the UK, which is home to the company's subsidiary Jaguar Land Rover. 

 

The US imposed a 10% blanket tariff on goods from the UK as against a 26% duty on Indian products and a 34% for Chinese goods. This implies that the UK will be able to negotiate a better deal with the US in times to come, in-turn benefitting JLR, which has a large manufacturing base in the UK, ICICI Direct said, while upgrading the stock to 'buy' with target price at INR 825.

 

On other hand, pharmaceutical stocks soared Thursday as US exempted the products in the sector from tariffs. IPCA Laboratories, Lupin, and Natco Pharma, were the top gainers and closed 3.7-5.8% higher. Large-caps such as Sun Pharmaceutical Industries and Cipla closed 3.0-3.3% higher. The US has exempted pharmaceuticals from reciprocal tariffs, given its focus on improving availability of affordable medical care of Americans, said Anuj Sethi, senior director, Crisil Ratings, in a note talking on US tariff impact on pharmaceuticals. India exported $8 billion of pharmaceutical products to the US in 2024, its largest export destination, and supplies 40% of generics consumed in the US, he said. The possibility of tariffs being imposed by the US on pharmaceuticals at a later stage cannot, however, be ruled out, he said. That said, several potentially mitigating factors such as ongoing drug shortages in the US, the higher cost of domestic pharmaceutical production in the US, and declining profitability of US pharmaceutical firms, are expected to be taken into consideration before any such imposition, he said.

 

Shares of textile manufacturers such as Vardhaman Textiles, Trident, Raymond, and K.P.R. Mill closed 6-18% higher as the US has imposed higher tariffs on other countries than the adjusted reciprocal tariff of 26% imposed on India. The US imposed reciprocal tariff of 34%, 37%, and 46% on China, Bangladesh, and Vietnam, respectively. Higher tariffs on these countries would lead to increase in demand and orders for Indian textile makers. Indian textile companies will likely start getting more orders and the customers may reallocate orders to Indian manufacturers, analysts said.

 

Some banking stocks reacted to their provisional data for FY25. Shares of AU Small Finance Bank closed 4.4% higher after its gross advances grew over 25% and deposits grew over 27% as of Mar. 31. IDBI Bank closed 2.8% higher after the bank's net advances grew 16% on year.

 

* Of the Nifty 50 stocks, 23 rose and 27 fell 

* Of the Sensex stocks, 13 rose and 17 fell

* On the NSE, 2,057 stocks rose, 829 fell, and 77 were unchanged

* On the BSE, 2,813 stocks rose, 1,169 fell, and 141 were unchanged

* Nifty IT: down 4.2%; Nifty Auto: down 1.1%; Nifty Pharma: up 2.3%

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BSE                                               NSE

Sensex: 76295.36, down 322.08 points or 0.4%      Nifty 50: 23250.10, down 82.25 points or 0.4%

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S&P BSE Sensitive Index	Nifty 50
Lifetime High: 85978.25 (Sept. 27, 2024)	: Lifetime High: 26277.35 (Sept. 27, 2024)
Record Close High: 85836.12 (Sept. 26, 2024)	: Record Close High: 26216.05 (Sept. 26, 2024)
2025 1st day close: 78507.41 (Jan. 1)	: 2025 1st day close: 23742.90 (Jan. 1)
2025 Closing High: 79943.71 (Jan. 2)	: 2025 Closing High: 24188.65 (Jan. 2)
2025 Closing Low: 72989.93 (Mar. 4)	: 2025 Closing Low: 22082.65 (Mar. 4)
2025 High (intraday): 80072.99 (Jan. 3)	: 2025 High (intraday): 24226.70 (Jan. 2)
2025 Low (intraday): 72633.54 (Mar. 4)	: 2025 Low (intraday): 21964.60 (Mar. 4)
2024 1st day close: 72271.94 (Jan. 1)	: 2024 1st day close: 21741.90 (Jan. 1)
2024 Closing High: 85836.12 (Sept. 26)	: 2024 Closing High: 26216.05 (Sept. 26)
2024 Closing Low: 70370.55 (Jan. 23)	: 2024 Closing Low: 21238.80 (Jan. 23)
2024 High (intraday): 85978.25 (Sep. 27)	: 2024 High (intraday): 26277.35 (Sept. 27)
2024 Low (intraday): 70001.60 (Jan. 24)	: 2024 Low (intraday): 21137.20 (Jan. 24)
2023 1st day close: 61167.79 (Jan. 2)	: 2023 1st day close: 18197.45 (Jan. 2)
2023 Closing High: 72410.38 (Dec. 28)	: 2023 Closing High: 21778.70 (Dec. 28)
2023 Closing Low: 59288.35 (Feb. 27)	: 2023 Closing Low: 17311.80 (Oct. 17)
2023 High (intraday): 72484.34 (Dec. 28)	: 2023 High (intraday): 21801.45 (Dec. 28)
2023 Low (intraday): 58699.20 (Jan. 30)	: 2023 Low (intraday): 17098.55 (Jan. 17)
2022 1st day close: 59183.22 (Jan. 3)	: 2022 1st day close: 17625.70 (Jan. 3)
2022 Closing High: 63284.19 (Dec. 1)	: 2022 Closing High: 18812.50 (Dec. 1)
2022 Closing Low: 51360.42 (Jun. 17)	: 2022 Closing Low: 15293.50 (Jun. 17)
2022 High (intraday): 63583.07 (Dec. 1)	: 2022 High (intraday): 18887.60 (Dec. 1)
2022 Low (intraday): 50921.22 (Jun. 17)	: 2022 Low (intraday): 15183.40 (Jun. 17)
2021 Closing High: 61305.95 (Oct. 14)	: 2021 Closing High: 18338.55 (Oct. 14)
2021 Closing Low: 46285.77 (Jan. 29)	: 2021 Closing Low: 13634.60 (Jan. 29)
2021 High (intraday): 61353.25 (Oct. 14)	: 2021 High (intraday): 18350.75 (Oct. 14)
2021 Low (intraday): 46160.46 (Jan. 29)	: 2021 Low (intraday): 13596.75 (Jan. 29)
2020 Closing High: 47751.33 (Dec. 31)	: 2020 Closing High: 13981.95 (Dec. 30)
2020 Closing Low: 25981.24 (Mar. 23)	: 2020 Closing Low: 7610.25 (Mar. 23)
2020 High (intraday): 47896.97 (Dec. 31)	: 2020 High (intraday): 14024.85 (Dec. 31)
2020 Low (intraday): 25638.90 (Mar. 24)	: 2020 Low (intraday): 7511.10 (Mar. 24)
2019 High (intraday): 41809.96 (Dec. 20)	: 2019 High (intraday): 12293.90 (Dec. 20)
2019 Low (intraday): 35287.16 (Feb. 19)	: 2019 Low (intraday): 10583.65 (Jan. 29)
2018 High (intraday): 38938.91(Aug. 28))	: 2018 High(intraday): 11760.20 (Aug. 28)
2018 Low (intraday): 32483.8 (Mar. 23)	: 2018 Low (intraday): 9951.9 (Mar. 23)
2017 High (intraday): 34005.37 (Dec. 26)	: 2017 High(intraday): 10515.10 (Dec. 26)

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End

 

Edited by Akul Nishant Akhoury

 

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