Pharma and IT Stocks Drop Up to 4% as Trump Tariffs Kick In

On March 4, shares of pharmaceutical and IT companies experienced a sharp decline as the tariffs imposed by US President Donald Trump on Canada and Mexico came into effect. This led investors to steer clear of export-sensitive stocks. Despite broader markets trading higher, both Nifty IT and Nifty Pharma stocks were in the red, while benchmark indices showed slight declines.

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IT Stocks Face Pressure

LTI Mindtree emerged as the biggest loser among Nifty IT stocks, plummeting nearly 4% to trade at ₹4,647 per share. Over the past month, the stock has already fallen by approximately 21%. Similarly, shares of Coforge, Persistent Systems, and HCL Tech dropped by nearly 2% each, while Mphasis slipped around 1% to ₹2,237 per share.

Other IT giants, including Infosys, Wipro, L&T Technology Services, and Tech Mahindra, also saw minor losses. However, TCS defied the overall trend, recording marginal gains and trading in positive territory.

The decline in IT stocks reflects broader concerns about global trade disruptions, particularly as US tariffs impact key economies. Many Indian IT firms derive significant revenue from North America, and heightened trade tensions could weigh on future earnings.

Pharma Stocks See Mixed Performance

Within the Nifty Pharma index, Sun Pharma took the hardest hit, declining about 2% to ₹1,560 per share. Over the past month, the stock has fallen by nearly 12%. Gland Pharma and Mankind Pharma each declined by over 1%, while other pharmaceutical stocks such as Torrent Pharma, Cipla, Lupin, Aurobindo Pharma, and Dr. Reddy’s Laboratories also traded in the red with slight losses.

On the other hand, several pharma stocks showed resilience, trading in positive territory. Biocon surged nearly 3%, while Laurus Labs, Abbott India, JB Chemicals & Pharmaceuticals, and Natco Pharma each posted gains of over 1%. Meanwhile, Ajanta Pharma, Glenmark, Alkem Labs, and Zydus Life recorded slight increases.

The mixed performance in pharma stocks suggests that while some companies are struggling with global trade uncertainties, others are benefiting from strong domestic demand and positive industry developments. Investors continue to assess the long-term impact of US trade policies on pharmaceutical exports.

Global Trade Tensions Escalate

With Trump’s tariffs on Canada, China, and Mexico now in effect, investor sentiment remains cautious, particularly due to his warnings of potential reciprocal tariffs on India. The uncertainty surrounding these trade policies has made investors wary of sectors heavily reliant on exports.

In response, Canada has unveiled a substantial counter-tariff package on US goods after Trump confirmed his administration would proceed with levies against Canada and Mexico. Canadian Prime Minister Justin Trudeau stated, "Canada will not let this unjustified decision go unanswered" in a statement released late Monday.

Meanwhile, China’s Commerce Ministry has pledged retaliation against the new US import tariffs, accusing Washington of attempting to "shift the blame" and "bully" Beijing over fentanyl-related issues. The US has alleged that China is a supplier of chemicals used in fentanyl production, a claim China has strongly denied.

Mexico’s President Claudia Sheinbaum, responding to the tariffs, stated, "We have a plan B, C, D," signaling a strategic approach to counter the economic impact.

Market Outlook and Investor Sentiment

Amid escalating trade tensions, investors are closely monitoring policy decisions and their implications on global markets. While IT and pharma stocks have borne the brunt of the latest developments, broader market indices remain relatively stable, indicating a selective sell-off rather than a market-wide panic.

Analysts suggest that IT companies with a strong domestic presence may be better insulated from the impact of US tariffs, while pharma firms focused on domestic and European markets could see continued growth. The situation remains fluid, and investors are advised to stay cautious while keeping an eye on further policy announcements from Washington, Ottawa, Beijing, and New Delhi.

As the global trade environment remains uncertain, businesses across sectors are bracing for potential volatility, making diversification and strategic risk management crucial for investors in the coming months.