Trump tariff, China, stock market: Will Sensex, Nifty see selloff on Monday?

A fresh trade salvo from US President Donald Trump, announcing steep tariffs on China from November 1, may send global markets, including India, tumbling on Monday. The move has reignited trade war fears, threatening to erase the positive momentum built by Indian benchmark indices last week.

Global risk sentiment took a sharp hit after US President Donald Trump escalated his trade conflict with China, which had earlier tightened restrictions on rare earth minerals. On Friday, Wall Street slumped, with the S&P 500 and the Nasdaq recording their worst single-day percentage drops since April 10. The Dow Jones Industrial Average fell 1.90 per cent to 45,479.60, the S&P 500 shed 2.71 per cent to 6,552.51, and the Nasdaq Composite plunged 3.56 per cent to 22,204.43.

Trump announced an additional 100 per cent tariff on Chinese imports and new export controls on critical US software. This sent shares of Big Tech tumbling, with major names like Nvidia, Tesla, and Amazon falling over 2 per cent. At last check, the Gifty Nifty was trading 0.78 per cent lower at 25,205, signaling a potential gap-down opening. This comes despite a strong showing last week, where both the Sensex and Nifty gained nearly 1.5 per cent.

Ponmudi R, CEO of Enrich Money and a SEBI-registered analyst, said the market’s direction in the coming week will depend on a combination of domestic factors, global macroeconomic trends, and corporate earnings.

 “The renewed escalation of the US–China tariff war, which sparked a sharp sell-off on Wall-Street on Friday, is expected to dampen global risk sentiment. This resurgence in trade tensions could spur dollar outflows, adding further pressure on emerging market equities and currencies,” Ponmudi said.

Ponmudi said that on the corporate front, all eyes will be on the IT sector, with heavyweights such as Infosys, HCL Tech, and Tech Mahindra set to announce their Q2 results. “With TCS recently reporting one of its steepest declines in headcount and outlining major investments in AI infrastructure, investors will be keen to gauge management commentary on demand outlook, earnings momentum, deal pipelines, and new initiatives in the AI and digital transformation space.”

Ponmudi said the Nifty continues to show resilience, forming a higher-low structure above the crucial 25,000–24,850 zone. “Trendline support and strong Put writing have helped the index absorb volatility and sustain its upward bias. On the upside, heavy Call open interest between 25,300–25,400 has created a near-term hurdle along the long-term slope resistance line. A decisive close above 25,500 could reignite bullish momentum and confirm a higher-high formation, opening the way toward 25,700–25,900,” Ponmudi said.

Ajit Mishra, SVP – Research, Religare Broking Ltd, said the market is entering the new week with a sense of cautious optimism. “The stability in FII inflows and improving domestic macro trends underpin a constructive outlook. However, investors should remain prepared for short-term volatility amid global developments such as the proposed US tariff action on China, key inflation data, and earnings releases,” Mishra said.

“From a trading perspective, maintaining a “buy-on-dips” approach above key support zones remains prudent. A selective, stock-specific strategy is advisable, focusing on sectors likely to post robust Q2 results. With sectoral rotation in play, preference should be given to stocks demonstrating relative strength within their respective sectors,” Mishra added.