It was a shocking morning as stock markets plunged sharply on Monday morning, mirroring a wave of panic selling seen across global exchanges. The fallout from escalating trade tensions — triggered by the US administration’s aggressive tariff stance — sent shockwaves through financial markets, dragging benchmark indices deep into the red.
By mid-morning, the Sensex had dropped over 2,700 points, and the Nifty 50 slipped below the 22,050 mark. Broader markets fared even worse, with midcap and smallcap stocks facing cuts of nearly 10%, wiping out ₹19 lakh crore in market capitalisation within minutes of opening.
Adding to the gloom, India’s volatility index (VIX) surged by over 50%, signaling nervousness among market participants amid the ongoing uncertainty.
Why Did the Markets Crash?
Global Sell-Off in Full Swing
Equity markets around the world have been under pressure since the weekend, after US President Donald Trump defended his tariff policies, calling them necessary and unavoidable. He made it clear that foreign governments would have to “pay heavily” to lift them — a message that rattled investors across continents.
Asian markets were the first to react, with Taiwan’s index nosediving 10% and Japan’s Nikkei tumbling by 7%. Wall Street had already closed Friday on a sour note, with the Dow, Nasdaq, and S&P 500 all registering heavy losses.
With no signs of easing tensions, investors dumped risky assets in anticipation of prolonged global economic strain.
Uncertainty Over Tariffs Deepens
Analysts believe the true economic cost of Washington’s tariff offensive hasn’t been fully factored in yet. The scope of affected countries and industries is expanding, and the lack of diplomatic resolution is beginning to weigh heavily on markets.
Brokerage firm Emkay Global cautioned that while India might not be directly hit, the spillover from a possible US-led recession could shave 3% off projected Nifty earnings this year. Such earnings pressure could see the index fall further, possibly toward 21,500 levels, it added.
Fears of Slowing Growth Return
The broader concern remains whether the trade war will derail global economic momentum. Higher tariffs are expected to inflate input costs, shrink corporate profits, and put brakes on consumer spending. These are classic ingredients of a slowdown.
JPMorgan has already upped its odds of a recession — both in the US and globally — to 60%. Even India, though more insulated, isn’t entirely safe. Following the tariff hike on Indian exports, Goldman Sachs trimmed its GDP forecast to 6.1%, while Citi projected a 40 basis points hit.
Foreign Investors Pull Back Again
The April sell-off also saw foreign portfolio investors (FPIs) withdrawing funds once more. After a brief phase of buying in March, they’ve sold over ₹13,700 crore worth of Indian stocks just this month. The outflow reflects rising concern over emerging markets’ vulnerability to global headwinds.
RBI and Earnings Season Create Caution
Investors are also playing it safe ahead of two key events this week: the RBI’s monetary policy meeting on April 9, and the start of the Q4 earnings season.
While there’s growing hope that the RBI may cut interest rates or introduce supportive measures, market players are waiting to see how the central bank responds to the external risks. On the corporate front, TCS is expected to kick off earnings season on April 10, and investor focus will be squarely on what managements say about future demand and global disruptions.
Also Read: Crashed! Stock Market Plunges Over 2600 Points, Nifty Goes Below 21,900
