Indian stock markets witnessed a sharp selloff on Wednesday after US President Donald Trump confirmed that India will face a 26% reciprocal tariff on exports to the United States, effective April 9, 2026. The Sensex plunged 800 points to close at 73,200, while the Nifty 50 fell below 22,800 — its lowest level since June 2024.
Tariff Impact: Sector by Sector
The 26% tariff rate was higher than the 15-20% that markets had been pricing in, triggering widespread selling:
Pharmaceuticals (Nifty Pharma: -5.8%): India exports $8 billion worth of generic drugs to the US annually. While essential medicines may receive exemptions, the uncertainty hammered pharma stocks. Sun Pharma (-7.2%), Dr. Reddy’s (-6.5%), and Cipla (-5.9%) were the worst hit.
IT Services (Nifty IT: -4.3%): While services are not directly covered by goods tariffs, fears of broader trade retaliation and reduced US corporate spending weighed on the sector. TCS (-4.8%) and Infosys (-3.9%) fell sharply.
Gems & Jewellery: India’s $10 billion jewelry export industry to the US faces the full 26% tariff. Titan (-5.1%) and Kalyan Jewellers (-8.2%) plummeted.
Government Response
Commerce Minister Piyush Goyal stated that India is “actively engaged in negotiations” with the US Trade Representative’s office and is prepared to offer concessions on agricultural imports, reduce tariffs on Harley-Davidson motorcycles and bourbon whiskey, and increase defence procurement from US manufacturers.
The government is also preparing a trade deal framework offering to reduce tariffs on 55 product categories worth $23 billion in bilateral trade.
Expert Analysis
Morgan Stanley estimates the direct GDP impact at 0.3-0.5% if the full 26% tariff sustains for a year. However, the indirect impact through business confidence, FII outflows, and rupee depreciation could be larger.
Domestic-focused sectors like banking, FMCG, and utilities held up relatively well, with HDFC Bank and Hindustan Unilever posting modest gains amid the carnage.