Indian stock markets plunged 5 per cent on Monday tracking Asian shares amid concerns over escalation in trade wars following the US reciprocal tariff announcements.
The BSE’s 30-share Sensex plunged 5.19 per cent, or 3,914 points to open at 71,449.94. The broader Nifty tumbled 5 per cent, or 1,146.05, to open at 21,758.4.
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.
On Friday, China swiftly announced retaliatory tariffs, matching the U. reciprocal tariff rate of 34 per cent.
“Investor confidence plummeted after US reciprocal tariffs triggered retaliatory measures from China. This escalating trade war has profoundly unsettled investors and intensified fears of an impending recession,” said Devarsh Vakil, Head of Prime Research, HDFC Securities.
Sharp fall in US market downturns weakened rebound expectations, and foreign institutional investors selling in Indian markets intensified bearish sentiment, he said.
Among Asian equities, Hang Seng was tanked 10.45 per cent, Shanghai Composite fell 6.34 per cent, Nikkei 225 tumbled 6.6 per cent and KOSPI slumped 4.83 per cent.
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“”Globally markets are going through heightened volatility caused by extreme uncertainty. No one has a clue about how this turbulence caused by Trump tariffs will evolve, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
In the domestic market, all broad market indices witnessed a heavy selling pressure. Nifty Smallcap 100 plunged 5.42 per cent and Nifty Midcap 100 declined 4.34 per cent.
Among the sectoral indices, Nifty Metal tanked 6.98 per cent, Nifty Oil & Gas fell 5.1 per cent, Nifty IT nosedived 5.93 per cent, and Nifty Auto slumped 4.6 per cent.
NSE companies that lost the most included Tata Steel (10 per cent), Tata Motors (8.31 per cent), Hindalco Industries (7.23 per cent), Infosys (7.1 per cent), Tech Mahindra (6.77 per cent).
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“Wait and watch would be the best strategy in this turbulent phase of the market,” Vijayakumar said.
According to him, 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 a 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.
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