Trump tariff tremors leave Sensex, Nifty shuddering with global peers

April 7 turned out to be a Black Monday for Indian equity markets as benchmark indices plunged sharply, wiping out investor wealth worth over ₹16 lakh-crore in a matter of hours.

The carnage was driven by escalating global trade tensions and fears of a looming recession in the US, triggered by American President Donald Trump's sweeping tariff hikes. The BSE Sensex nosedived 3,939 points (5.22 per cent) to an intraday low of 71,425.01, while the Nifty 50 tumbled 1,160 points (5 per cent) to 21,743.65 — its worst single-day fall since June 2024.

The Sensex closed at 73,137.90, down 2,226.79 points or 2.95 per cent, while the Nifty50 ended at 22,161.60, a decrease of 742.85 points, or 3.24 per cent.

Global meltdown

The global market meltdown began last week following Trump's announcement of "reciprocal tariffs" on imports from nearly 180 countries. These tariffs included a staggering 34 per cent tax on Chinese imports and similar levies on goods from the EU, Japan, South Korea, and Taiwan.

On Monday, Asian markets mirrored Wall Street's turmoil, with Japan's Nikkei 225 plunging nearly 8 per cent and Hong Kong's Hang Seng Index tanking over 11 per cent in early trading.

The Nikkei 225 closed down 2,644.00 points, or 7.83 per cent, at 31,136.58, marking its lowest closing level since October 31, 2023. The Hang Seng Index plunged 13.2 per cent to close at 19,828.30, its steepest single-day decline since the 1997 Asian financial crisis.

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Heightened volatility

"The irrational Trump tariffs have triggered heightened volatility across global markets,” Vinod Nair, Head of Research at Geojit Financial Services, told The Federal. “While India is relatively better placed due to its limited export dependency on the US, the uncertainty is weighing heavily on investor sentiment."

Back home, all sectoral indices on the NSE ended in the red. Nifty Metal was the worst hit, with a decline of 6.75 per cent, dragged down by stocks like Tata Steel and National Aluminium Company. IT heavyweights Infosys and TCS also saw sharp declines of nearly 7 per cent each as fears of a global slowdown loomed large.

Vikram Kasat, Head of Advisory at Prabhudas Lilladher, projected a cautious yet optimistic outlook for the market. He set a 12-month Nifty target at 27,212, suggesting a gradual recovery driven by sectors like railways, defence, and data centres, which are expected to benefit from increased capital expenditure and supportive government policies aimed at infrastructure expansion.

Call for caution

Market experts are advising caution amid the turmoil. Ajit Mishra, SVP (Research) at Religare Broking, warned that a decisive close below 21,700 could pave the way for further declines toward 21,300. "While recovery attempts may face resistance in the range of 22,500-22,800, traders should remain cautious," he said.

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The India VIX (Volatility Index), a measure of market fear and uncertainty, surged over 56 per cent, reflecting the panic among investors. "We expect heightened volatility to persist as markets digest the implications of these tariffs," said Rupak De, Senior Technical Analyst at LKP Securities. He highlighted that Nifty has slipped back into a descending channel on the daily chart and identified resistance levels at 22,350 and support at 21,700.

‘Limited direct impact’

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, offered a broader perspective: "India's exports to the US account for only about 2 per cent of GDP, so the direct impact may be limited. However, the ripple effects of a global slowdown cannot be ignored."

Abhishek Goenka, founder and CEO of IFA Global, commented on the broader implications: "This sell-off underscores how interconnected global markets have become. We expect Nifty's recent lows near 21,800 to be revisited this week as uncertainty persists."

Amid this turbulence, analysts are urging investors to focus on domestic themes with long-term growth potential. Vinod Nair suggested that sectors less exposed to global trade dynamics may offer better opportunities once stability returns.

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Global markets

The broader implications of the US tariffs were also evident in other global markets. The FTSE 100 in the UK dropped 6 per cent to a one-year low, and Germany's DAX experienced a 10 per cent intraday decline. Goldman Sachs raised the probability of a US recession to 45 per cent, citing tightened financial conditions and increased policy uncertainty.

With key events such as the Reserve Bank of India's (RBI) monetary policy meeting and corporate earnings announcements scheduled later this week, all eyes will be on whether these developments can provide some respite to battered markets.