FIRST TRADE: Sensex falls 665 points, Nifty slips 0.9% to 23,271 as Trump tariffs weigh

Indian equities tracking weak global cues started Monday's session (February 3) sharply lower after the US President Donald Trump announced tariffs on Canada, Mexico and Chinese goods, which could result in retaliatory measures from these countries on US imports. At the open, Nifty fell 0.9 per cent or 210.95 points to 23,271.2, while the 30-share Sensex slumped 0.86 per cent or 664.46 points to 76,841.5.

Broader markets too faced a sharp decline, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices trading with a cut of over 1.6 per cent. India VIX, the volatility index that measures expected market volatility, also climbed nearly 5 per cent in early trade.

Sectorally, it is a sea of red with across-the-board sell-off led by the metal stocks with the Nifty Metal index down 2.5 per cent, followed by banks, financial and realty stocks. Nonetheles, consumer durable pack traded in the green.

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Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "Despite an excellent Budget the market will be under pressure from the Trump tariffs and the heightened global uncertainty these ‘initial round of tariffs’ has triggered.

It is important to understand that the 25 per cent tariffs imposed on Mexico and Canada are to punish them for issues like immigration and illicit trade in fentanyl. Trump may use tariffs again against other countries on non-trade issues. China’s response to the 10 per cent tariffs has been more responsible. For now, they have not reacted like Mexico and Canada by imposing tariffs on imports from the US. Instead, they are moving the WTO against the US action, added Vijaykumar.

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "The sentimental impact may fuel pessimism in domestic markets on fears that similar US measures could be imposed on Indian imports as mentioned during his pre-election campaigns. Although global factors will continue to dominate the mood, local investors will also be looking forward to this week's RBI monetary policy.

Technical outlook

Anand James, Chief Market Strategist, Geojit Financial Services on the Nifty outlook said, "Despite the relatively strong close post Budget, the volatility through the day ensured that a lesser number of Nifty 500 constituents were seen above their respective 10 day SMAs, when compared to Friday. Among the F&O stocks, which are the most actively traded, only 56.5 per cent of stocks were seen closing above their respective 10 day SMAs on the Budget day, as opposed to 67 per cent stocks on Friday."

We read this as a desire to take a pause, for which reason, we shall accommodate dips to 23400 before the 23700-840 trajectory resumes. An outright fall below 23190 could force us abandon the upside view though, added James.