The Indian stock market witnessed one of its worst trading sessions in recent years on Monday, as fears of an escalating trade war and a global economic slowdown - sparked by recent US tariff hikes - rattled investors worldwide.
At closest, the benchmark indices - BSE Sensex and NSE Nifty50 - were down by about 3% each. Sensex settled at 73,137.90, down 2,227 points while Nifty settled at 22,242.30, down 662 points. Investors lost nearly Rs 13 lakh crore as the total market capitalization of BSE-listed firms slumped from Rs 403.5 lakh crore on Friday to Rs 390.7 on Monday.
The BSE Sensex had 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.
All the sectoral indices fell on Monday with the Metal Index shedding 7% and the Realty Index falling 6%. BSE Midcap and Smallcap indices settled 3.8% and 4.5% lower. Among stocks, Trent, Tata Steel, JSW Steel, Hindalco Industries and L&T were the top Nifty losers.
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%. The Taiwan benchmark halted trading, as it plummeted 9.7%. Germany's DAX fell 10% on open, while London's FTSE 100 tumbled around 5% in trade. 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%.
The fall in the market is attributed to the reciprocal tax imposed by US President Donald Trump last week on goods imported into the world’s largest economy. This move stoked fears of an all-out global trade war, with retaliatory tariffs expected from China, the EU, and others. On Friday, China’s Finance Ministry announced that starting April 10, Beijing will impose an additional 34% tariff on all US goods - further escalating tensions.
These measures, according to analysts, are inherently inflationary and could complicate the US Federal Reserve’s monetary policy trajectory. Furthermore, any escalation in trade disruptions may heighten recessionary risks in the US, leading to a broader slowdown in global economic activity.
Abhishek Jaiswal, Fund Manager at Finavenue said that Monday’s sharp correction in the Indian stock markets is largely a spillover from global concerns, rather than domestic fundamentals.
“The real worry lies in how such policy moves could fuel inflation, disrupt supply chains, and trigger a slowdown or even recession over the coming years,” added Jaiswal.
Trivesh, COO of Tradejini, said that the steep correction was sparked by China’s announcement of a 34% import tax on all U.S. goods, a direct retaliation to President Donald Trump’s sweeping tariff move last week.
Anand K. Rathi, co-founder of MIRA Money said that it is extremely challenging to predict how each country will respond to tariffs. The market is declining rapidly, assuming a global recession, but circumstances can change quickly depending on how and when the tariffs are implemented, added Rathi.
He advised investors to continue with Systematic Investment Plans (SIPs), and any surplus investments should be directed into long-term treasury funds, such as government bonds or corporate bonds with long maturities.
