MUMBAI: The Indian stock market plummeted sharply on Monday, mirroring a global market meltdown driven by fears of an escalating trade war and a slowdown in the global economy following recent U.S. tariff hikes.
The BSE Sensex plunged over 4,000 points (5.3%) to hit a low of 71,725 while the Nifty 50 tumbled nearly 1,150 points (5%) to 21,744 in early trading. The broader market saw even steeper declines, with the BSE Midcap and Smallcap indices crashing up to 10% in pre-opening deals.
The sell-off echoed across Asian markets, where Japan’s Nikkei, Hong Kong’s Hang Seng, and China’s Shanghai Composite fell between 5% and 10%. This followed a sharp downturn in U.S. markets on Friday, with the S&P 500, Dow Jones, and Nasdaq dropping as much as 6%.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that no one has a clue about how this turbulence caused by Trump tariffs will evolve. He added that wait and watch would be the best strategy in this turbulent phase of the market.
“There are a few things that investors should keep in mind. One, the irrational Trump tariffs will not continue for long. Two, India is relatively better placed since India’s exports to the US as percentage of GDP is only around 2 percent and therefore the impact on India’s growth will not be significant. Three, India is negotiating a Bilateral Trade Agreement with the US and this is likely to be successful resulting in lower tariffs for India,” stated Vijay.
Trump on Wednesday declared a universal 10% baseline tariff on US imports, calling it "Liberation Day," with reciprocal tariffs starting at that rate.
While most countries would face the baseline levy, 60 nations - including India —would be subject to higher duties, some as steep as 50%. India's exports to the US will now attract a 26% tariff, which Trump described as a "discounted" rate compared to India's 52% average tariff on US goods.
The move has sparked a massive selloff in US markets and the spillover effects are seen across global equity markets, including India.