Market starts FY26 on shaky note: Sensex, Nifty plunge up to 2%; gold shines

The Indian equity market started the financial year 2025-26 on a rough note, with benchmark indices Sensex and Nifty falling nearly 2% in intraday trade amid concerns about economic impact of the U.S. President Donald Trump’s reciprocal tariffs to be implemented from April 2. In the backdrop of persistent volatility in the equity market, investors rushed to buy safe-haven assets like gold and dollar amid looming fears of rising inflation and slowing global economic growth. The spot price of gold surged to a fresh record high of $3,120 levels today, driven by strong safe-haven demand, while the U.S. dollar index, which measures the currency against six major peers, rose to 103.9 during the day.

Extending losses for the second straight session, the BSE Sensex declined as much as 1,503 points, or 1.94%, to hit an intraday low of 75,912, eroding investors' wealth by ₹4.15 lakh crore. The total market capitalisation of the BSE-listed companies dropped to ₹409.60 lakh crore.

Similarly, the NSE Nifty50 plunged 383 points, or 1.6%, to touch the day’s low level of 23,136.  The broader market witnessed a mixed trend, with the BSE midcap index falling up to 1.3%, while the BSE smallcap index rose over 1% in intraday trade.

Out of 30 stocks on the BSE Sensex pack, barring IndusInd Bank, all index heavyweights were trading in negative terrain, with HCL Tech, Bajaj Finserv, Infosys, HDFC Bank, and Bajaj Finance falling in the range of 3-4%. Bucking the trend, IndusInd Bank shares rallied over 5%.

Among individual stocks, Vodafone Idea witnessed strong buying, with the telecom stock rising as much as 20% intraday. Investors rushed to buy debt-laden telco shares as the government is set to more than double its stake in the company in lieu of outstanding spectrum auction dues.

Will the sell-off continue, or will there be another upturn?

In the near-term, markets trends will depend on the details of Trump’s reciprocal tariffs to be announced tomorrow. “This will depend mainly on what Trump announces in tariffs. If the tariffs are lower-than-feared there can be a rally in the market which will be led by externally linked sectors like pharmaceuticals and IT. On the other hand, if the tariffs are severe there can be another round of downturn in the market. Investors can wait and watch and respond after the details are known," says VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Last month, the benchmark indices delivered positive returns of 6% as the market ended its five months losing streak in March 2025 – the longest monthly losses since 1996. Driven by strong comeback rally in March, Indian equities ended the financial year 2024-25 on a positive note, with the Sensex and the Nifty50 delivering positive returns of 5% each.

The remarkable shift in the market was largely due to change in foreign institutional investors (FIIs) strategy from sustained selling to modest buying which was visible in the week ending March 21 and continued with increased intensity for the week ending March 28. Big buying by FIIs during the last several days of March substantially reduced the total FII selling in March to ₹6,027 crore. Since FIIs invested ₹2,055 crore through the primary market, the net FII sell figure for March is down to only ₹3,972 crore, says Vijayakumar of Geojit Investments.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)