Indian Stock Market Crashes Amid US Tariff Shock and Global Sell-Off
Indian shares fell sharply on Monday, reflecting a steep sell-off in Asian shares, as fear of a global trade war intensified in the wake of the US declaring tariffs on major trading partners, including India. The benchmark BSE Sensex plummeted 5.19 per cent or 3,914 points to open at 71,449.94, and the broader NSE Nifty fell 5 per cent or 1,146.05 points to begin at 21,758.40.
The stinging rebuke follows US President Donald Trump's move last week to introduce reciprocal tariffs, including a 26 per cent increase on Indian imports. A minimum 10 per cent tariff on all imports bound for the US became effective from April 5. In response, China introduced equivalent tariffs of 34 per cent on US products, raising fears of an all-out trade war.
"Investor sentiment crashed following US retaliatory tariffs that provoked countermeasures from China", stated Devarsh Vakil, HDFC Securities' Head of Prime Research. "This rising trade war has deeply unnerved investors and amplified fears of a looming recession".
The ripple effects were evident across Asian markets. Hong Kong’s Hang Seng Index nosedived 10.45 per cent, Shanghai Composite declined 6.34 per cent, Japan’s Nikkei 225 dropped 6.6 per cent, and South Korea’s KOSPI fell 4.83 per cent.
Across the world, markets are experiencing increased volatility due to excessive uncertainty. Nobody knows how this Trump tariff-induced turbulence will pan out," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Locally, wider market indices witnessed intense selling pressure. Nifty Smallcap 100 plummeted 5.42 per cent, and Nifty Midcap 100 lost 4.34 per cent. Of sectoral indices, the worst performer was Nifty Metal, which fell 6.98 per cent. Nifty IT fell 5.93 per cent, Nifty Oil & Gas 5.1 per cent, and Nifty Auto 4.6 per cent.
Key NSE losers were Tata Steel (down 10 per cent), Tata Motors (8.31 per cent), Hindalco Industries (7.23 per cent), Infosys (7.1 per cent), and Tech Mahindra (6.77 per cent).
Vijayakumar recommended a wait-and-watch approach for investors. "Wait and watch would be the best strategy in this turbulent phase of the market", he said.
He mentioned that India is still somewhat sheltered, with exports to America constituting barely 2 per cent of GDP. Also, India is actively negotiating a Bilateral Trade Agreement with America that would potentially assist in smoothening tariff issues in the future.
