Markets plunge as Trump’s trade tariff plans rattle investors; Sensex tanks 1,235 points 

Equity markets witnessed a very volatile session which ended with a sharp selloff on Tuesday, and the benchmark Sensex plummeting 1,235.08 points to close at 75,838.36, marking its biggest single day drop in recent months. The broader Nifty 50 index fell 320.10 points to end at 23,024.65, as investors grappled with concerns over potential global trade disruptions following former US President Trump’s announcement of new tariffs. Besides, subdued Q3 financial performances from India Inc too added selling pressure.

Equity markets witnessed a very volatile session which ended with a sharp selloff on Tuesday, and the benchmark Sensex plummeting 1,235.08 points to close at 75,838.36, marking its biggest single day drop in recent months. The broader Nifty 50 index fell 320.10 points to end at 23,024.65, as investors grappled with concerns over potential global trade disruptions following former U.S. President Trump’s announcement of new tariffs. Besides, subdued Q3 financial performances from India Inc too added selling pressure.

Today’s market behaviour was not for weak hearts, as it swung widely. For instance, the Nifty opened in a positive zone but witnessed a secular downtrend plunging 175 points till around 11.30 a.m. and saw a sudden spike to hit a high of 23,410, wiping out the entire losses by noon but to fail again almost immediately. Post 2.30, the fall aggravated with several mid and small-cap stocks across sectors witessing heavy selling pressure.

Capturing the mood, the volatility index closed above 17 points for the first time since November 22, 2024.

All-round selling

The market-wide selling pressure was evident in the broader indices, with the Nifty Next 50 falling 2.61 per cent and the Nifty Midcap Select declining 2.78 per cent. The banking sector also faced significant pressure, with the Nifty Bank index dropping 1.58 per cent to 48,570.90.

“Markets were on a cautious mode in the past few sessions, but witnessed frenzied selling on Tuesday as investors now fear that Trump’s inaugural speech to safeguard America’s interest could hurt economic prospects of many countries, including India, going ahead,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Among individual stocks, Apollo Hospitals emerged as the top gainer on the NSE, rising 2.13 per cent, followed by Tata Consumer Products (+1.22 per cent), BPCL (+1.10 per cent), Shriram Finance (+0.65 per cent), and JSW Steel (+0.53 per cent). On the flip side, Trent led the losses with a 6 per cent decline, followed by NTPC (-3.44 per cent), Adani Ports (-3.29 per cent), ICICI Bank (-2.84 per cent), and Adani Enterprises (-2.78 per cent).

The market breadth was decidedly negative, with 2,785 stocks declining compared to 1,189 advances on the BSE. The session saw 103 stocks hitting 52-week highs, while 67 touched their 52-week lows. The volatility was further evidenced by 241 stocks hitting the upper circuit and 243 hitting the lower circuit.

FPI pullout hurts

Vinod Nair, Head of Research at Geojit Financial Services, noted, “The weak recovery in the ongoing Q3 earnings, coupled with a depreciating INR, are likely to prompt further outflows from FIIs. Mid and small-cap stocks underperformed compared to the main indices. The realty sector was hit the hardest due to weak pre-result updates.”

The gold market reacted positively to the global uncertainties, with the precious metal gaining ₹400 on MCX to reach ₹79,000. Jateen Trivedi, VP Research Analyst at LKP Securities, explained, “The rise was driven by heightened trade uncertainty following Trump’s announcement of raising tariffs on imports from Mexico and Canada. The U.S. president plans to implement a 25 per cent tariff on imports from these countries by February 1.”

Technical analysts maintain a cautious outlook. “The current market texture is volatile, and thus level-based trading would be the ideal strategy for day traders,” advised Shrikant Chouhan of Kotak Securities. Vatsal Bhuva from LKP Securities added that a close below 23,000 could push the Nifty toward pre-election levels of 22,500.

According to  Hardik Matalia, Derivative analyst at Choice Broking, “The India VIX surged 3.90 per cent to 17.0550, reflecting heightened market volatility and increased uncertainty among participants, signaling the potential for larger price swings in the near term. Open Interest (OI) data indicates the highest OI on the call side at the 23,200 and 23,300 strike prices, highlighting strong resistance levels. On the put side, OI is concentrated at the 23,000 and 22,800 strike prices, marking these as key support levels.”

“Market volatility isn’t just turbulence; it’s a stress test for portfolios. The key to emerging stronger lies in precision: trim weak holdings, reinforce stability with gold and debt, hedge risks smartly, and seize mispriced opportunities. Adaptation, not reaction, defines long-term outperformance.” said Rishabh Nahar, Partner and Fund Manager, Qode Advisors

Looking ahead, Ajit Mishra from Religare Broking suggests adhering to a “sell on rise” strategy, citing persistent FII selling and a lackluster start to the earnings season as key factors dampening market sentiment. The recent uptick in India VIX further contributes to the prevailing cautious outlook.