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Indian benchmarks have their worst session in the last three weeks due to US tariff fears.

India's benchmark indices fell on Tuesday. It was their worst session in the last three weeks. Fears of reciprocal tariffs by the U.S. were to blame.

The NSE Nifty50 closed 1.32% lower, at 23,071.8. Meanwhile, the BSE Sensex dropped 1.32%, to 76,293.6. Blue-chips dropped for the fifth consecutive session, and their largest single-day percentage decline since January 21.

In five sessions, the indexes lost around 3%.

The benchmarks have fallen about 12% from the record highs they reached on September 27, 2024. Meanwhile, smallcap and midcap indices are moving into bear market territory. They are down 20% from their respective all-time-highs of December 12 and September 24.

The more domestically-focussed small and midcaps indexes tumbled 3.5% and 3% each on the day, taking the combined drop from their record highs to 18.5% and 16.5%, respectively.

Analysts believe that small and midcap stocks could face further pressure from investors as the earnings growth does not justify high valuations.

In the meantime, U.S. president Donald Trump raised tariffs on imports of steel and aluminum to 25% on Monday and announced plans to impose reciprocal levies against several countries within two days.

Multiple brokerages have said that India is likely to be the country most affected by reciprocal tariffs because of its large tariff differentials.

Trump's tariff threat continues to harm market sentiment and trigger selling pressure. Vinod Nair is the head of research for Geojit Financial Services.

The testimony of Federal Reserve Chair Jerome Powell later in the afternoon will be closely evaluated for its commentary on U.S. Tariffs and Inflation.

Investor sentiment has been affected by both tariff concerns and the slowing of domestic corporate earnings.

Eicher Motors, the maker of Royal Enfield motorcycles, was the biggest percentage loser among individual stocks. This is because it missed quarterly profit and margin expectations.

(source: Reuters)