Trump tariffs trigger 33% crash in these stocks in February: Is the worst behind?

Indian stock markets faced a turbulent February, with IT, auto, and pharma stocks taking a significant hit amid fears of a US economic slowdown and concerns over potential tariff escalations under former US President Donald Trump’s policy outlook. The Nifty fell 6 per cent, marking its worst February since the Covid crash, while sector-specific worries led to steep corrections across key indices. The Nifty IT index emerged as the biggest loser, plunging 11 per cent, followed by Nifty Auto (-8 per cent) and Nifty Pharma (-5 per cent).

IT stocks slide as US slowdown fears grow

The Nifty IT index emerged as the worst-performing sector in February, tumbling 11 per cent as investors priced in risks of a US economic slowdown. All 10 stocks in the index ended in the red.

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• Mphasis led the losses, plummeting 22 per cent.
• LTIMindtree and Tata Consultancy Services (TCS) dropped 18 per cent and 14 per cent, respectively.
• Persistent Systems, Tech Mahindra, Infosys, and Wipro also declined between 13 per cent and 7 per cent.

Analysts caution that potential tariffs and economic uncertainty could impact IT demand from the US, which remains the biggest market for Indian tech firms.

Auto stocks under pressure as Tesla’s India entry spooks investors

The Nifty Auto index slipped 8 per cent in February as concerns over competition from Tesla overshadowed the sector.

• Bharat Forge saw the sharpest fall, losing 17 per cent.
• Tata Motors, Samvardhana Motherson, and Bosch were down between 14 per cent and 11 per cent.
• Maruti Suzuki, M&M, and Hero MotoCorp also faced selling pressure.

Tesla's plans to open its first showroom in Mumbai’s Bandra Kurla Complex have rattled the domestic market. While experts argue that the entry of a global EV leader could accelerate India's transition to electric vehicles, near-term concerns persist over pricing and competitive pressures.

Pharma stocks struggle amid tariff uncertainty

The Nifty Pharma index declined 5 per cent in February, dragged down by concerns over reciprocal tariffs in the US.

• Natco Pharma recorded the steepest fall, sinking 33 per cent.
• Biocon, Torrent Pharma, and Granules India posted double-digit losses.
• Glenmark, Sun Pharma, Cipla, and Lupin fell between 9 per cent and 1 per cent.

India exported $8.7 billion worth of medicines to the US in FY24, while imports from the US stood at just $800 million. While fears of higher tariffs persist, industry experts suggest that their potential impact on Indian drug makers remains limited.

March outlook: Will markets stabilise?

With February witnessing persistent FII selling and weak cash volumes, analysts remain cautious about a sharp recovery in March. Historical trends indicate that IT and auto stocks tend to underperform in March, with average negative returns of 1 per cent and 2.6 per cent, respectively, over the past decade. However, broader market sentiment could stabilise as investors eye key global and domestic cues.

While near-term headwinds remain, market participants will be watching economic indicators and global trade developments closely to gauge future trends.