Will Sensex, Nifty Continue Their Tariff-ied Fall Next Week? Five Key Triggers To Watch

Indian equity markets encountered a turbulent week as global trade tensions intensified, sending shockwaves across major indices. 

The NIFTY 50 and Sensex witnessed sharp declines, reflecting investor anxiety amid uncertain global economic conditions.

"We are likely to see a further fall in the benchmark index NIFTY after a 2.6% fall in the previous week, which was largely in line with our expectations," said Sugandha Sachdev, Founder of SS WealthStreet.

Global Tariff Fallout
Global equity markets were jolted after US President Donald Trump announced reciprocal tariffs on a slew of trading partners.

"The move was far more aggressive than initially expected, prompting immediate retaliation from China, which slapped a 34% tariff on US imports. This is likely to lead to a wider trade war globally, and hurt sentiments for the domestic markets as well,” said Sachdev.

"Global markets were rattled this week as a wave of risk-off sentiment swept across equities," observed financial analyst Sudeep Shah, Deputy Vice President & Head of Technical & Derivatives Research at SBI Securities. "The escalating trade tensions have reignited fears of a slowdown in global economic activity," he added.

 The fallout was evident as US indices recorded their worst single-day losses since Covid-19, dragging Asian markets down with them. The Wall Street slump and a red close for the Asian indices cascaded into sharp losses for Indian equities as well.

Technical Analysis and Market Trends
Both the Sensex and Nifty struggled to maintain key support levels amidst heightened volatility. Technical indicators signaled bearish momentum, with indices slipping below crucial moving averages and showing signs of continued downward pressure.

"From recent highs, both indices have seen significant corrections," noted Shah.

"Talking about crucial levels, the zone of 22400-22350 will act as immediate support for the index. If the index slips below the 22350 level, then we may witness a further correction upto the 21900 level in the short term," he cautioned. “Going ahead, the zone of 74000-73900 will act as crucial support for the index. If the index slips below the level of 73900, then we may witness a sharp correction upto the level of 73200, followed by 72500 in the short term.“

 

“Even though the weakness in the dollar index and crude oil prices is likely to provide some support, weak global cues are likely to dominate the trend,” Sachdev added. “We may see some “rebound”but otherwise, the rallies are likely to fizzle out, and once the level of 22,500 is also breached “convincingly”

Sector Watch: IT and Metals Under Pressure
Sectorally, IT and Metal indices are dragging benchmarks down, with both sectors heavily exposed to global conditions.

“The IT sector earns a major share of its revenue from the US economy. Given the tariff situation and potential recession fears, IT stocks are witnessing pressure,” said Sachdev.

“Many metals have been exempted from these tariffs, but the sentiment is weak, and we are witnessing a lot of decline in metal stocks, which might drag the index further lower,” she added.

While FMCG and private banks have shown some resilience, broader market sentiment remains fragile.

Read More 
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Key Triggers Ahead
As markets prepare for the next trading week, several pivotal events are poised to influence investor sentiment and market direction:

RBI MPC Meeting
Investors keenly await the RBI 's monetary policy decision on April 9. Analysts anticipate a potential interest rate cut to stimulate economic growth amidst global uncertainties.

‘Another factor to look out for would be the RBI policy meeting, which is lined up on 9th April, and there are high expectations that RBI is likely to cut rates by 25 basis points,’ said Sachdev

Q4 Earnings Season Begins
The earnings season kicks off with Tata Consultancy Services ( TCS ) announcing its results on April 10.

Foreign Institutional Investment (FII) Activity

Foreign institutional investors (FIIs) became aggressive sellers, withdrawing around ₹13,730 crore from the cash segment. Meanwhile, domestic institutional investors (DIIs) offered some support with net inflows of approximately ₹5,632 crore. Additionally, foreign portfolio investors (FPIs) also shifted to a selling stance in April.
 

“Even though FIIs had turned buyers in the recent sessions, they have again turned net sellers. That is likely to exacerbate the fall we may see in the domestic indices,” Sachdev pointed out.

Global Economic Indicator
The week ahead includes pivotal global economic data releases, including US inflation figures and the US Federal Open Market Committee (FOMC) minutes. These will offer insights into US monetary policy and economic health.

Tariff Developments
Ongoing developments in global trade policies, particularly US tariff actions, will remain a focal point. Any escalation could exacerbate market volatility and impact multinational corporations.