Budget Cheer Fades: Markets Fall in Red Again, Sensex Down 600 Points

Sensex Nifty fall: All the pre-budget market cheer seems to have faded off. Despite the budget bringing in the much-needed change in the personal income tax slab and maintaining a thin balance between fiscal discipline and boosting consumption, the D-street is finding little reason for optimism.

On Monday, benchmark indices, Sensex and Nifty, witnessed a sharp decline of 0.8% during the morning session. BSE Sensex was down by over 600 points. L&T, NTPC, PowerGrid, Tata Steel and Tata Motors were among the biggest losers from the Sensex pack.

NSE Nifty fell below the 23,300 level mark. Nifty Energy was the worst-performing sectoral index, declining by more than 1,100 points or over 3%. Except for major consumption stocks in the auto and FMCG space, nearly all sectors were trading in red.

Analysts believe that the sudden reverse in optimism is majorly driven by Trump imposing tariffs on China, Mexico and Canada. What is further complicating the situation is the strengthening dollar index, which is trading above 109.

"Despite an excellent Budget the market will be under pressure from the Trump tariffs and the heightened global uncertainty these ‘initial round of tariffs’ has triggered," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

"Now we don’t know how this will pan out. For now, India is not affected. Therefore, the impact on the Indian market will be less. But the spike in the dollar index to above 109.6 will trigger more selling by FIIs putting the market under pressure," he further said.

Trade Wars on the Horizon?

While Canada has already begun removing American alcohol from shelves as a retaliatory measure, Mexico has also vowed to take necessary action. The Western nation has imposed a 25% tariff on Mexico and Canada in response to issues like immigration and the illicit trade in fentanyl. 

"Today's tariff announcement is necessary to hold China, Mexico, and Canada accountable for their promises to halt the flood of poisonous drugs into the United States," the White House said in a statement on X on Saturday.

This action could spark fresh trade wars in an already complicated geopolitical sphere and eventually make the future outlook more blurry.