‘Black Monday’: Why did Sensex crash by almost 4,000 points on Monday morning trade?
Indian benchmark indices Sensex and Nifty crashed by more than 5 per cent on Monday morning. The 30-stock Sensex tumbled more than 3,939 points to 71,425 while the NSE Nifty 50 slid at least 1,160 points to 21,743 in early trade on April 7. Indian investors became poorer by ₹20.16 lakh crore on Monday morning amid the Trump tariff-triggered global market meltdown.
India was further impacted by the rupee depreciating by 19 paise to 85.63 against the US dollar in early Monday trade.
This is the fallout of the global trade war triggered by the US slapping reciprocal tariffs on many countries of the world, in a move led by POTUS Donald Trump. China was quick with retaliation, leading to equity markets crashing worldwide to record lows.
The market is also cautious as the three-day discussion by the Reserve Bank of India's monetary policy committee began on Monday. The six-member panel is expected to decide on key interest rates and is set to announce them on Wednesday.
Foreign institutional investors (FIIs) returned to net selling, offloading ₹3,483.98 crore worth of equities on Friday.
With all stocks of the BSE benchmark trading in the red in morning trade, the Sensex crashed 5.22 per cent. Meanwhile, the NSE Nifty tumbled by 5.06 per cent. Tata Steel shed more than 8 per cent, while Tata Motors fell by 7 per cent. HCL Tech, Tech Mahindra, Infosys, L&T, TCS, and Reliance Industries were the other titans who stared at major losses.
The trade war fuelled by Trump's 'retaliatory tariffs' sent the Hang Seng (Hong Kong) down almost 11 per cent. The Nikkei 225 (Japan) slumped by at least 7 per cent, while China's Shanghai SSE Composite index fell by over 6 per cent. The Kospi index (South Korea) dropped 5 per cent.
The US tariffs seem to have done good to no one as the American markets ended last Friday in the red, with the S&P 500 sliding by 5.97 per cent, the Nasdaq composite plummeting 5.82 per cent, and the Dow slipping by 5.50 per cent.
Head of Research at Reliance Securities, Vikas Jain pointed out that the latest global slowdown came after the world realised that Trump's tariff move would attract consequences such as China announcing its plan to impose reciprocal 34 per cent tariffs on all US imports starting April 10.
With China and Japan indices sliding close to 10 per cent, the stakes of the ongoing trade war have escalated, raising concerns about a potential global recession that could affect everyone, added Jain.
With the US and China lifting tariffs, trade tensions are set to intensify further, slowing global growth and lifting chances of higher inflation.
Despite this, experts such as NSE Managing Director and Chief Executive Officer Ashish Kumar Chauhan are of the opinion that India would fare better than the rest of the world.
In his latest media interaction with agencies, Chauhan stated that we would get more clarity within the next one or two weeks, with negotiations and a stabilisation of the duty structure.
The National Stock Exchange chief on Friday said that the Indian share market seems to be doing much better than other countries after the US announcement on reciprocal tariffs.
"A situation of confusion persists as of now. Many feel that some companies may face more losses. But overall, there will be negotiations and the duty structure will be stabilized. The situation should be clear in the next one or two weeks," the NSE head told agencies.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services weighed in on the Monday onslaught. "No one has a clue about how this turbulence caused by Trump's tariffs will evolve. Wait and watch would be the best strategy in this turbulent phase of the market," he said.
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