Indian stock markets plunge as Trump tariffs bite: what investors should do

Indian shares fell sharply on Monday as concerns over a trade war and growing recession fears in the U.S. continued to fuel a global stock market rout. The Nifty 50 dropped 4.03% to 21,982.05, while the BSE Sensex fell 3.86% to 72,455.5, marking their steepest intraday losses since March 2020.

The broader Asian markets were also heavily impacted, with the MSCI Asia ex-Japan index losing 7.6% and Japan’s Nikkei 225 dropping 7%. The Nifty volatility index jumped 57%, indicating extreme investor anxiety. ​

All 13 major Indian sectors declined, with IT, metals, and financials among the worst performers. Concerns about muted Q4 earnings and possible downward pressure on India’s FY2026 GDP growth were raised, although government officials stated growth targets remain unaffected. ​

Analysts emphasized that market recovery will depend on developments in trade policies and investor sentiment.

STRATEGISE LONG TERM

Advice for Investors in this time of downturn is to be cautious and strategic, given the volatile conditions, largely thanks to the uncertainty over how far this ‘Trump tariffs’ driven trade tensions will continue. The Indian government has so far indicated that it will not go in for counter-tariffs like several other countries but try and weather the storm by way of negotiations. The US and India are in talks to sign up a BTA or Bilateral Trade Agreement, which New Delhi hopes will spare the country’s trade from the punishing tariffs. The main strategy overall would be to look at the long term rather than try to make quick gains.

Analysts recommend balancing portfolios with stable, large-cap stocks that have strong fundamentals. For those with a higher risk appetite, mid- and small-cap stocks with growth potential could pay off. Adding safer assets like bonds, fixed-income securities, or gold is advised to hedge against equity losses, with gold seen as a safe haven given its 38% gain in India over the past year.

Some experts view the downturn as a chance to buy undervalued stocks. The focus is on sectors with resilience, such as pharmaceuticals (boosted by tariff exemptions) and defensive plays like FMCG and healthcare.

STAY INFORMED

Investors are urged to stay informed about key developments. The U.S. tariffs announced on April 2, 2025, particularly the 26% reciprocal tariff on Indian exports, are a major concern, potentially impacting export-driven sectors like IT and auto components. Domestically, the Reserve Bank of India’s upcoming monetary policy decision (April 7–9) and corporate earnings for Q1 2025 are critical. A potential RBI rate cut could lift sentiment, while weak earnings might deepen the slump.

Overall, the consensus leans toward a disciplined, diversified approach—resisting panic, seizing opportunities in oversold areas, and preparing for ongoing uncertainty. Investors are encouraged to assess their risk tolerance, align strategies with long-term goals, and keep cash reserves to deploy if the market finds a bottom, which some analysts peg near Nifty’s technical support levels of 21,500–22,500. For the latest shifts, watching live market updates and policy announcements remains key.