Sensex, Nifty tank as fresh US tariffs trigger global trade war concerns

Benchmark equity indices, the BSE Sensex and NSE Nifty50, continued their southward move and ended in negative territory on Tuesday, settling down by over 1 per cent each. Declining for the fifth day running, the 30-share BSE Sensex tanked 1,018.20 points or 1.32 per cent to settle at 76,293.60. The NSE Nifty50 also ended lower by 309.80 points, or 1.32 per cent, at 23,071.80.

All sectoral indices on the NSE ended in the red. Among them, Nifty PSU bank, auto, healthcare, and realty indices ended with losses extending up to 3.28 per cent. BSE Midcap and Smallcap also slipped over 3 per cent each in trade.

Experts are of the view that are many reasons which led to fall. One of the major reasons is that Foreign Institutional Investors (FIIs) are continuously selling Indian equities, which is denting market sentiments. Secondly, the tariff hike by US President Donald Trump on steel and aluminum imports by a flat 25 per cent is raising worries for the investors.

According to analysts, this would potentially disrupt the trade flows, causing oversupply in alternative markets and economies such as India, and potentially lead to a fall in international steel prices. Additionally, his plans to impose ‘reciprocal tariffs’ on other countries over the next two days is also worrisome.

Brokerage firms are of the view that this could hurt countries such as India, China and Thailand more than developed Asian countries such as Hong Kong and Singapore.

Chinese manufacturers are facing overcapacity and already supplying their excess steel production in India at very competitive prices.

Chinese producers could dump their excess steel in India with rates below the prevailing market prices, leaving no room of competition for Indian manufacturers.

To safeguard the sector, the steel ministry in December proposed a 25 per cent safeguard duty on certain steel products imported into the country.