AFTER LOSING $6.6 trillion in value over two days last week, US stocks were highly volatile Monday with the Dow Jones Industrial Average swinging wildly over 2,400 points in the first hour of trading, and down 2 per cent at 10.30 am (EST). The Nasdaq Composite also yo-yoed 1,125 points, and was down 1 per cent at 10.30 am.
Globally, markets crashed, with Nifty and Sensex in India down almost 5 per cent in the morning, but ending the day 3-3.25 per cent down. It was their biggest single day fall since June last year, tracking the nervousness and fall in equity markets globally amid fears of escalation in trade wars after US President Donald Trump announced reciprocal tariffs last week.
During the day, stocks in the US rallied on expectations of a thaw on the tariff front. The administration, however, clarified there would be no delay in implementing new levies. In fact, in another round of escalation, US President Donald Trump threatened additional tariffs of 50 per cent on US imports from China if the latter did not withdraw the 34 per cent tariff it had imposed on US products last week.
In a post on social media platform ‘Truth Social’ Trump said, “If China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.” He further said, “All talks with China concerning their requested meetings with us will be terminated!”
He, however, maintained that negotiations with other countries, which have also requested meetings, will begin taking place immediately.
The BSE Sensex tanked 2.95 per cent, or 2,226.79 points, to close at 73,137.9. The broader Nifty 50 plunged 3.24 per cent, or 742.85 points, to end at 22,161.6. At the opening, the Sensex tumbled 5.19 per cent, and Nifty nosedived 5 per cent. The markets, however, recovered during the last hour of the trading session.
It was the biggest single-day fall for the Sensex and Nifty in almost 10 months. On June 4, 2024, the Sensex and the Nifty had plummeted 5.74 per cent and 5.93 per cent, respectively, following the Lok Sabha election results announcement.
The market capitalisation, or the total value of all listed shares, of the BSE-listed firms declined by Rs 14.09 lakh crore to Rs 389.25 lakh crore. Foreign portfolio investors (FPIs) sold Rs 9,041.01 crore of domestic shares, which was countered by domestic institutional investors (DIIs) who purchased Rs 12,122.45 crore of shares, according to the BSE’s provisional data.
The India VIX, an indicator of the market’s expectation of volatility over the near term, zoomed 65.7 per cent to close at 22.79. On June 4, 2024, the volatility index had gained 27.75 per cent to settle at 26.75.
“After US markets plunged on Friday, it was writing on the wall for other global equity indices which fell like a pack of cards amid fears that Trump’s policies on reciprocal tariffs may lead to recession and higher inflation in the US going ahead,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Already, commodity prices of crude oil and several metals are seeing a downward slide, which is an indication of a slackening demand if the current trend persists.
Last week, US President Donald Trump announced reciprocal tariffs on various trading partners of the US, including India. India faces a 26 per cent hike in tariffs. A 10 per cent minimum tariff came into effect from April 5 on all imports entering the US.
“The market tumbled as the carnage over high US tariffs and the retaliation by other countries may kickstart a trade war,” said Vinod Nair, Head of Research, Geojit Investments Limited.
On Friday, China announced retaliatory tariffs, matching the US reciprocal tariff rate of 34 per cent. The European Union is also in the process of approving imposing retaliatory tariffs on the US.
Global indices witnessed heavy selling. Euro Stoxx50 crashed 4.31 per cent, IBEX 35 fell 5.14 per cent, Hang Seng tanked 13.22 per cent, Shanghai Composite fell 7.34 per cent, Nikkei 225 tumbled 7.83 per cent and KOSPI slumped 5.57 per cent.
In the domestic market, sectors like IT and metals underperformed relative to the broader market due to the risk of high inflation with slower growth that may result in a potential recession in the US.
Nifty Smallcap 100 plunged 3.88 per cent and Nifty Midcap 100 declined 3.63 per cent.
Among the sectoral indices, Nifty Metal tanked 6.75 per cent, Nifty Oil & Gas fell 2.79 per cent, Nifty IT nosedived 2.51 per cent, and Nifty Auto slumped 3.78 per cent.
NSE companies that lost the most included Trent (14.7 per cent), JSW Steel (7.53 per cent), Tata Steel (7.26 per cent), Tata Motors (5.34 per cent), Hindalco Industries (5.92 per cent), Larsen & Toubro (5.31 per cent) and Reliance Industries (2.78 per cent).
The decline was driven by fears of a global trade war and rising recession concerns in the US, which sparked a stock market sell-off on Wall Street and across other Asian markets.
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