US Tariffs are Back: Indian Stock Market Faces Sharp Decline

In the week gone by, global markets experienced volatility due to several key developments: a draft minerals agreement between the U.S. and Ukraine, Nvidia’s earnings report, and the U.S. reintroducing tariffs. In this blog, we’ll know in detail what happened last week (February 24, 2025 to February 28, 2025) all across the globe.

Nvidia Earnings and Tariff Deals

Markets faced selling pressure following a disappointing forecast from Al chipmaker Nvidia, coupled with uncertainty surrounding U.S. tariff policies and political dynamics. Conversely, the U.S.-Ukraine minerals agreement uplifted investor sentiment, seen as a vital step in Kyiv’s efforts to secure U.S. support amid President Trump’s push to end the war with Russia.

Trump confirmed a 25% tariff on goods from Canada and Mexico, effective March 4, alongside an additional 10% tariff on China starting the same date. He also suggested a potential 25% “reciprocal” tariff on cars and other goods from the European Union. However, after meeting U.K. Prime Minister Starmer, Trump indicated that Britain might avoid tariffs if a trade deal is finalized.

Amid these trade tensions, U.S. economic data revealed a slowdown, with fourth-quarter growth at 2.3% (down from 3.1% in the prior quarter), higher-than-expected jobless claims, and PCE inflation rising to 2.4%, potentially impacting the Federal Reserve’s interest rate decisions. In Japan, core consumer prices eased to 2.2% in February from 2.5% in January yet remained above the Bank of Japan’s 2% target.

India’s Record Breaking Fall

Back at home, the market is heading toward its fifth consecutive monthly decline – the longest streak since 1996, making it the weakest performer globally. Weak earnings, sustained foreign outflows, and U.S. tariff uncertainties have dampened sentiment.

Since October 2024, foreign investors have offloaded Indian equities worth ₹3.12 lakh crores, including ₹0.47 lakh crores in February 2025. Meanwhile, domestic institutional investors, buoyed by robust retail participation, countered this trend, purchasing ₹3.25 lakh crores worth of equities, with ₹0.52 lakh crores bought in February 2025.

A recent IMF report further soured sentiment, highlighting challenges to India’s world-leading economic growth due to geo-economic fragmentation and waning domestic demand, urging structural reforms to meet the country’s development goals.

Conclusion

Looking ahead, investors are likely to adopt a cautious stance, closely tracking U.S. tariff developments, peace talks in West Asia and between Russia and Ukraine, upcoming economic data, and the ECB meeting outcome next week. So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.