The Sensex and Nifty tumbled 0.7 percent each around noon of February 10 after Trump announced plans to impose new duties on all steel and aluminum imports, along with additional reciprocal tariffs. Meanwhile, Indian Prime Minister Narendra Modi is reportedly considering tariff concessions in a bid to smoothen the upcoming talks with Trump and prevent a full-fledged trade war.

The sell-off was led by financials, oil and gas, and metal stocks, dragging the Nifty lower. Market volatility spiked, with the India VIX surging over six percent to 14.5.

At 11:37 AM, the Sensex was down 500 points or 0.7 percent at 77,355, and the Nifty was down 163 points or 0.7 percent at 23,396. About 955 shares advanced, 2,569 shares declined, and 123 shares were unchanged.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that India's valuation premiums remain stretched, particularly in the broader market. "?The market needs fundamental triggers like indications on GDP growth and earnings rebound. Until then the market is likely to move only in a range," he said.

Foreign investors continued their exit, dumping Indian equities worth Rs 10,179 crore so far in February, as a stronger US dollar and high Treasury yields made emerging markets less attractive. Vijayakumar pointed out that with the dollar index above 108 and US 10-year bond yields at 4.5 percent, foreign institutional investors will likely keep selling into rallies, capping any major upside.

The Indian rupee hit a record low on February 10, mirroring losses in Asian currencies after U.S. President Donald Trump announced plans for additional tariffs. The rupee weakened by 49 paise, opening at an all-time low of 87.92 per dollar. Amit Pabari, MD of CR Forex Advisors, expects the rupee to hover between 87.50 and 88.20 in the near term, with 87.50 acting as a key support level amid global and domestic policy shifts.

The broader markets took a sharper hit, underperforming the benchmarks as both the BSE Midcap and BSE Smallcap indices tumbled two percent.

Excluding the Nifty FMCG index, which managed a modest 0.2 percent gain, all other sectoral indices were deep in the red. The metal index bore the brunt of the selling, sliding nearly three percent after Trump’s February 9 statement vowing to slap 25 percent duties on steel and aluminum imports, on top of existing levies. All 15 stocks in the metal index declined, with Tata Steel, SAIL, and Vedanta suffering the worst losses, down between three and four percent.

Tata Steel, Power Grid, Trent, ONGC, and JSW Steel were the biggest drags on the Nifty 50, falling two to three percent. Meanwhile, defensive plays like Britannia, Tata Consumer, HUL, Kotak Mahindra, and Wipro bucked the trend, rising one to two percent.

Among individual stocks, Oil India tumbled 4.5 percent after reporting weaker-than-expected third-quarter earnings due to lower selling prices. Shipping Corporation of India sank over five percent after posting a lower December-quarter profit, while water treatment firm VA Tech Wabag climbed over three percent after securing a $364 million order and reporting strong quarterly numbers.

On the technical front, Sameet Chavan, Head of Research, Technical, and Derivative at Angel One, identified 23,400 and 23,250 as crucial support levels. He said that a break below these levels could push the Nifty back toward 23,000 and lower.

Markets will now closely watch CPI inflation data from both India and the U.S., set for release on February 12.