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Markets Open Sharply Lower Amid US-China Trade Tensions, RBI’s Cautious GDP Outlook
Benchmark equity indices opened on a weak note Wednesday, tracking global market softness and escalating geopolitical and economic concerns. The BSE Sensex dropped over 550 points in early trade, while the NSE Nifty slipped below the key 22,400 mark.
At its intraday low, the Sensex declined by 554.02 points or 0.74% to 73,673.06, and the Nifty fell by 197.25 points or 0.87% to 22,356.6. However, both indices partially recovered losses by mid-morning.
Key Factors Behind the Decline:
1. Intensifying US-China Trade War:
Global markets were rattled after the US imposed a steep 104% tariff on Chinese imports. Beijing responded with retaliatory tariffs of 34% on US goods, heightening concerns of a prolonged trade conflict. The renewed tension has prompted investors to adopt a risk-off approach.
“The move to impose such high tariffs is unprecedented and has significantly increased global uncertainty,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2. Surge in US Bond Yields:
The yield on the 10-year US Treasury rose by 20 basis points to 4.5%, while the 30-year yield climbed to 4.97%, impacting the appeal of equities. Rising bond yields are typically associated with tightening financial conditions, prompting capital outflows from emerging markets.
3. RBI’s GDP Forecast Revision:
In its FY26 bi-monthly monetary policy, the Reserve Bank of India projected a downward revision in GDP growth due to recent US tariffs on Indian exports. Governor Sanjay Malhotra stated that the 26% tariff on Indian goods could shave off 20–40 basis points from the growth estimate, bringing GDP growth closer to 6.1% from the earlier projection of 6.7%.
Sectoral Impact:
Losses were broad-based, with the IT and metals sectors bearing the brunt of the sell-off. Market breadth remained weak, indicating widespread caution among investors.
Technical Outlook:
Anand James, Chief Market Strategist at Geojit Financial Services, noted resistance near 22,660 for the Nifty.
“Unless the index breaches 22,660 decisively, we expect continued consolidation near the 22,300 level. A fall below 22,160 could trigger fresh volatility, although the chances of that remain limited,” he added.
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