Nifty 50, Sensex back in red despite RBI repo rate cut as tariff-led turmoil weighs; IT stocks hit hard

Stock market today: Indian stock market slipped into the red again after a one-day relief rally, as investor anxiety returned on concerns that U.S. negotiations with trading partners on reciprocal tariffs would not result in any positive outcomes.

The RBI repo rate cut for the second consecutive time didn’t lift investor sentiment, as heightened global trade tensions overshadowed the domestic policy support.

U.S. President Donald Trump, on Tuesday, hit China with an additional 54% tariff, taking the total tariff rate on goods from the world’s second-largest economy to 104%. The new tariffs on Beijing, along with higher duties on other countries including India, took effect today.

With trade tensions persisting, investors continued their selling spree, dragging stocks to multi-month lows. The Nifty 50 ended the session down 0.61%, closing at 22,399 points, while the Sensex also declined by 0.51%, ending at 73,847.

The broader markets also slipped into the red, with the Nifty Midcap 100 index falling 0.51% to close at 49,582 points, while the Nifty Smallcap 100 ended with even higher loss of 0.86% 15,256 points.

Heightened trade tensions and retaliatory measures are also weighing on target price cuts across several sectors. Information technology has been hit the hardest, as the industry is heavily dependent on the U.S. economy for revenue compared to other domestic sectors.

Global brokerage firm Jefferies, in its latest note, cut earnings per share (EPS) estimates for Indian IT companies by 2–14%. Consequently, the firm lowered price targets on several Indian IT stocks, with reductions ranging from 5% to 35%, citing rising uncertainty in the sector.

Earlier, domestic brokerage firm Kotak Institutional Equities, said that shares of Indian IT companies could fall up to 38% if a recession hits the U.S. economy, making the Nifty IT index one of the biggest casualties in the ongoing tariff-led market meltdown.

The index has once again emerged as the top sectoral laggard, losing 2.19%, taking the current month fall to 12%. This was followed by a 1.16% decline in March and a 12.53% drop in February. Metal stocks have also emerged as another major casualty in the recent market crash, as investor concerns intensified over the impact of U.S. trade tensions on China, one of the world’s largest consumers and producers of metals.

RBI delivers second consecutive rate cut

As widely expected, the Reserve Bank of India (RBI), in its first bi-monthly policy meeting of FY2025–26, announced a 25-basis-point rate cut for the second consecutive time and shifted its stance from ‘Neutral’ to ‘Accommodative’.

With a total reduction of 50 basis points over the last two meetings, the RBI has brought the repo rate—the rate at which it lends to commercial banks—down to 6% from 6.5%.

The decline in consumer prices in recent months has given the central bank the confidence to proceed with a second rate cut.

On the inflation front, the RBI said that prices are expected to remain under control in FY2025–26, amid easing vegetable prices, which prompted the bank to lower its inflation projection for FY26 to 4%, assuming a normal monsoon.

However, the RBI has revised its growth forecast for FY26 downward to 6.5% from 6.7%, citing heightened tariff tensions.

Commenting on the today’s market performance, “Vinod Nair, Head of Research, Geojit Investments, said, “Global financial markets are witnessing renewed selling pressure following the enactment of reciprocal tariffs. A trade war is escalating global risk, with a rise in U.S. bond yields prompting a sell-off in the world’s safe treasury assets. In India, a cut in the repo rate, along with the adaptation of an accommodative policy stance, is taken as a constructive step.”

“However, it has done little to uplift overall market sentiment, as the world is embracing recessionary risk. The IT sector continues to lag ahead of Q4 results, which are estimated to be weak. Pharma remains cautious over potential headwinds arising from the imposition of U.S. tariffs on the industry. On a positive note, domestic focus sectors like FMCG are trading better due to lack of recessionary risk from global slowdown,” he added.

Technical Outlook

Rupak De, Senior Technical Analyst at LKP Securities, said, “Nifty continues to trade below the upper band of the falling channel and the 21-day EMA, indicating short-term weakness and resistance near 22,500. The RSI shows a bearish crossover, reinforcing the negative momentum. The trend is expected to stay weak below 22,500, with a breakout potentially driving the index to 22,750–22,800. Failure to cross 22,500 may drag it down toward 22,000.”

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.