Sensex, Nifty trade in red as fears grip investors over new Trump tariffs; metal stocks crash

Benchmark equity indices were in red on Monday, despite the the Reserve Bank of India’s (RBI) rate cut and the Bharatiya Janata Party’s (BJP) victory in the Delhi elections. Investors remained jittery as global trade concerns, particularly U.S. President Donald Trump’s fresh tariffs on steel and aluminium, weighed on sentiment.

The benchmark BSE Sensex nosedived over 600 points in early trade, hitting a low of 77,189.04, while the NSE Nifty shed nearly 200 points, extending losses as selling pressure mounted.

By the time of market closing, Sensex had pared some of its losses, falling over 550 points. By 3 pm, the index was at 77,326.

Rupee hits record low amid trade worries

Adding to the market’s woes, the rupee tumbled to a fresh record low of 87.95 per U.S. dollar, breaching last week’s low of 87.58. The currency’s decline was driven by fears of escalating U.S. trade tariffs and weakening regional currencies. Traders indicated that the RBI could step in if volatility persists, but for now, the rupee continued to trade weak at 87.93, down 0.6% for the day.

A depreciating rupee raises concerns over rising import costs, particularly crude oil, and foreign investment outflows, prompting speculation that the RBI may consider further intervention.

Trump’s tariffs hit metal stocks hard

The biggest question that seems to be in everyone's mind is the reason behind today's fall in the markets. Point to be noted is that the biggest drag on the markets came from metal stocks after Trump announced a 25% tariff on steel and aluminium imports, sending shockwaves through global commodity markets. Speaking aboard Air Force One, President Trump confirmed that the new tariffs—on top of existing duties—would take effect almost immediately.

This triggered a selloff in Indian metal stocks, with the Nifty Metal index plunging 2.94%. Major steel producers JSW Steel, Tata Steel, and SAIL saw significant declines as investors braced for weaker exports and tighter margins.

Outlook: Will RBI intervene?

While the RBI’s rate cut was expected to boost liquidity and support growth, the market’s reaction suggests broader macroeconomic concerns are taking precedence. Analysts warn that if the rupee continues to slide, the RBI may need to step in with measures to stabilise the currency and restore investor confidence.

For now, investors will closely watch global trade developments and policy signals from the central bank as they navigate an increasingly uncertain market landscape.