The Indian equity markets closed in the red on Wednesday, as fears around US tariff-related uncertainty weighed on investor sentiment, especially impacting information technology (IT) and pharmaceutical stocks. The BSE Sensex shed 379.93 points or 0.51% to settle at 73,847.15, while the NSE Nifty 50 dropped 136.70 points, or 0.61%, closing at 22,399.15.

Despite the negative close, late recovery in select sectors helped both benchmark indices recover from intraday lows, highlighting cautious optimism in certain segments.

IT Stocks Drag Markets Down

The biggest drag of the session was the Nifty IT index, which plunged 2.22%, becoming the worst-performing sector for the day. Among major laggards:

• Tata Consultancy Services (TCS) declined 2%, ahead of its quarterly earnings announcement due on April 10.

• Infosys fell 2.16%, extending recent losses tied to global headwinds.

Tariff-related concerns from the US, particularly in sectors sensitive to outsourcing, triggered broad-based selling in frontline tech counters. Investors remain cautious about the potential impact of further trade restrictions, especially as global demand shows signs of moderation.

Banking and Midcaps Under Pressure

The banking segment also witnessed selling pressure, with the Nifty Bank index falling 271 points to 50,240. Top private lenders like HDFC Bank and State Bank of India (SBI) were among the major Nifty losers.

The Nifty Midcap index also fell by 256 points, ending the day at 49,582, reflecting a broader market weakness. The advance-decline ratio on the NSE stood at 1:2, suggesting selling pressure across sectors.

Gold Loan and City Gas Stocks Slide

Another significant development was the sharp decline in gold loan financiers, led by Muthoot Finance, which tumbled 7%. The decline came ahead of the Reserve Bank of India’s (RBI) upcoming monetary policy statement, with market participants expecting cues on interest rate direction and regulatory stances.

City gas distribution stocks also faced heat:

• Mahanagar Gas Ltd (MGL) slipped 5%

• Indraprastha Gas Ltd (IGL) dropped 3%

Both stocks witnessed heavy volume-based selling, possibly on expectations of weak demand growth and margin pressure.

Pharma Sector Reels Under US Tariff Worries

The pharmaceutical sector was under pressure following US President Donald Trump's reiteration of potential tariff plans. This led the Nifty Pharma index to close 2% lower.

One of the worst-hit stocks was Glenmark Pharma, which slid nearly 5% following a recall of 39 drugs in the US. The sentiment in pharma remained negative due to regulatory overhangs and fears of increased scrutiny in export markets.

FMCG Stocks Provide Respite

In contrast, fast-moving consumer goods (FMCG) stocks outperformed the broader market. This was primarily attributed to positive commentary and outlooks by brokerages:

• Nestle India rose as analysts remained bullish on its pricing and rural demand.

• Hindustan Unilever (HUL) gained on expectations of volume recovery.

• Godrej Consumer Products also ended higher, driven by brokerage upgrades.

These gains were critical in capping market downside as investors sought refuge in defensive stocks with relatively stable earnings visibility.

Oil Marketing Companies and Two-Wheeler Stocks Rise

Following Tuesday's strength, oil marketing companies (OMCs) extended their rally:

• Indian Oil Corporation (IOC), BPCL, and HPCL all gained between 1% and 3%.

• The sector benefited from crude oil price stability and inventory gains.

Meanwhile, two-wheeler stocks like Hero MotoCorp and TVS Motor also witnessed buying interest, spurred by hopes that the RBI could announce a repo rate cut, which would support auto financing and demand.

Senco Gold and IDBI Bank Among Standout Gainers

Outside the frontline sectors, Senco Gold emerged as a top gainer, surging over 5% on the back of strong quarterly updates and optimism around demand resilience.

IDBI Bank also rose around 2%, after a government official confirmed that the bank's divestment process is on track. This bolstered investor confidence in upcoming strategic disinvestments.

Volatility Ahead: RBI Policy and Earnings Season

The overall sentiment remains cautious with a high degree of volatility expected in the coming sessions. Two critical events will shape near-term market direction:

1. RBI Monetary Policy – Investors are closely watching the policy stance, especially after recent commentary on inflation moderation and liquidity measures.

2. Q4 Earnings Season – With TCS kicking off earnings on April 10, investors are looking for guidance on growth trends, margin sustainability, and demand visibility across sectors.

Conclusion

In summary, Wednesday's market action highlighted the fragility of sentiment in the face of global policy concerns, especially from the US tariff front. Sectors like IT and pharma, closely tied to global demand and regulatory changes, bore the brunt of the sell-off.

However, defensive sectors like FMCG, along with selective gains in OMCs and banking divestment plays, helped cushion the blow. With RBI's monetary policy and the Q4 earnings season around the corner, market participants are likely to stay on edge.

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