Sensex, Nifty to open flat; Trump’s tariffs on Canada, Mexico add volatility

Despite the gloom, domestic markets are expected to open on a flat note with a positive bias. Beaten-down stocks will see a pullback rally, said analysts. US President Donald Trump’s Induced volatility will keep the market on edge, they added. In the latest, Trump has said he is moving forward with 25 per cent tariffs on goods imported from Canada and Mexico. An additional 10 per cent tariff on Chinese imports is also expected to come into force.

Concerns over continued FII selling, the imposition of tariffs by the US on Canada, Mexico and China and ongoing geopolitical tensions between Russia and Ukraine continue to impact domestic market sentiments, said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.

Both private and government consumption witnessed an improvement during the quarter. India’s manufacturing PMI eased to a 14-month low of 56.3 in February from 57.7 in the previous month due to losing momentum in new orders and production, dampening investor sentiments. “We expect market to remain flat to negative on account of mixed global cues and lack of domestic triggers,” he added.

Nifty futures at Gift City are currently hovering around 23,000, about a 40-point gain over the NSE closing value.

In a note, Motilal Oswal Financial said:  The market correction has coincided with a slowdown in earnings growth, as the Nifty-50 has managed only 4% PAT growth in 9MFY25 (following a healthy 20%+ CAGR during FY20-24). 

“The expectations for FY26 corporate earnings (19% for the MOFSL Universe and 15% for the Nifty-50) are still somewhat elevated, in our opinion, given the underlying macro-micro backdrop and are thus ripe for further downgrades,” it warned, adding that the recent correction in broader markets factors in some of the potential disappointments in earnings ahead. That said, the valuations for mid-caps and small-caps are still expensive vis-à-vis their history as well as vs. Nifty-50, it further said.

“ The Nifty is trading at a 12-month forward P/E of 18.6x, below its long-period average (LPA) of 20.5x. Thus, we continue to remain biased toward large-caps with a 76% allocation in our model portfolio. We are OW on Consumption, BFSI, IT, Industrials, Healthcare, and Real Estate, while we are UW on Oil & Gas, Cement, Automobiles, and Metals,” analysts at Motilal Oswal said.

Meanwhile, equities across the Asia Pacific region are down in early deals. The Japan index crashed over 2 per cent, while others in the region are down between 0.5 per cent and 2 per cent, though Korea’s Kospi is relatively stable with just 0.15 per cent down. Overnight, major indices in the US slumped between 1.5 per cent and 2.7 per cent.

Despite marking its ninth straight session of decline, the market managed to avoid any major damage following Friday’s sharp fall, said Rajesh Bhosale, Technical Analyst, Angel One Ltd.

Technically, Nifty has now entered a key support area between 22000 and 21800. Prices are currently hovering around the 89 WEMA, a significant long-term moving average that previously acted as a strong reversal point in September 2020, June 2022, and March 2023. Interestingly, last year’s pre-election rally also began from this same consolidation zone of 22,000 – 21,800.

Although the recent sell-off has been relentless, breaking through multiple support levels with ease, the oversold conditions combined with the start of a new month keep hopes alive for an intermediate rebound in the near term, he said, adding “Until there is confirmation of a sustainable recovery, caution remains warranted, but the ongoing decline is gradually offering opportunities to accumulate quality stocks in a staggered manner from a short to medium-term perspective.”

For now, resistance levels are seen at 22,300, followed by the bearish gap near 22,450. Meanwhile, geopolitical tensions continue to simmer in the background, and any major developments on that front could trigger sharp directional moves, making it essential to stay vigilant as the trend unfolds, he further cautioned