Stock markets opened to a brutal sell-off on Monday morning, with benchmark indices plummeting following sharp declines across global markets after the escalation of trade tensions between the United States and China.

The Sensex crashed by over 2,500 points, opening at 71,449.94 versus the previous close of 75,364.69, and is currently at 72,793.67 — down 2,571.02 points or 3.41 per cent. The Nifty also saw a steep plunge, opening at 21,758.40 compared to the previous close of 22,904.45, and is now at 22,069.50, slipping 834.95 points or 3.65 per cent at 9.40 am.

The market rout, already being labeled “Black Monday” by traders, comes after China announced retaliatory 34 per cent tariffs on all US imports starting April 10, matching the reciprocal tariffs announced by the Trump administration last week. This dramatic escalation has sent shockwaves through global financial markets, with Asian indices recording severe losses – Chinese markets plunged 10 per cent while Japanese markets fell 8 per cent.

“Gift Nifty is signaling a weak start for Indian markets, mirroring Friday’s global sell-off after Trump’s aggressive tariff move triggered panic on Wall Street. The Dow plunged 2,231 points, pushing it into correction territory, while the Nasdaq slid into a bear market,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Domestic markets witnessed a complete absence of buying interest, with all 50 stocks in the Nifty index trading in the red. The selling pressure was widespread across sectors, with retail, steel, and auto stocks leading the decline. Trent emerged as the biggest loser, plummeting 14.57 per cent, followed by Tata Steel and Tata Motors, which fell 10.40 per cent and 9.75 per cent respectively.

Market volatility spiked dramatically, with the India VIX (fear gauge) surging 51.78 per cent to 20.88, reflecting heightened uncertainty among investors.

“Brace for the Opening Slump. On April 2, President Donald Trump announced U.S. reciprocal tariff plans that exceeded market expectations in their scope and severity. A 10 per cent minimum tariff will apply to all imports entering the U.S. beginning April 5, with higher tariffs targeting countries with which the U.S. maintains larger trade deficits,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

The new U.S. measures are projected to raise the effective tariff rate on imports from 2.3 per cent in 2024 to between 20 per cent-25 per cent, marking the highest level in at least a century. The escalating trade war has wiped out approximately $11 trillion in U.S. market value since Inauguration Day, according to market observers.

Commodity markets have also been hit hard. Gold prices declined 3 per cent to below $3,000 per ounce, while Brent crude oil sank 4 per cent to a two-year low of $63 per barrel after Saudi Arabia slashed its flagship crude price by the most in more than two years.

“Gold and silver experienced extreme volatility last week, plunging sharply following the imposition of reciprocal trade tariffs by the United States on key trading partners. Silver posted its steepest weekly decline in five years,” noted Rahul Kalantri, VP Commodities at Mehta Equities Ltd.

The global panic comes ahead of the Reserve Bank of India’s monetary policy decision scheduled for April 9 and TCS quarterly results on April 10, adding to market nervousness.

“NIFTY-50 has broken on the downside with negative momentum from its inside range on back of weakness in global markets and revised support is near to 22,500 levels,” said Vikas Jain, Head of Research at Reliance Securities.

Technical analysts suggest that the market could find support around the 22,000-21,800 range. “After a sharp correction, we believe the market is trading near the 20-day and 50-day Simple Moving Averages. The short-term outlook indicates that if the market reclaims the 23,000 mark, we could see a pullback rally reaching up to 23,250-23,325,” said Shrikant Chouhan, Head Equity Research at Kotak Securities.

Foreign Institutional Investors (FIIs) remained net sellers for the fifth consecutive session on April 4, offloading equities worth ₹3,483 crore, while Domestic Institutional Investors (DIIs) also turned net sellers with outflows of ₹1,720 crore.

Some analysts, however, suggest that India may be relatively better positioned to weather the storm. “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 Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“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. India is negotiating a Bilateral Trade Agreement with the US and this is likely to be successful resulting in lower tariffs for India,” he added.

Market participants are advised to exercise caution given the extreme uncertainty. “Markets fear uncertainty and will not wait for these issues to be eventually resolved. Indian markets are likely to slump at the opening today. Global correction has gained momentum. Risky assets are under intense selling pressure,” warned Vakil.

Traders are being advised to adopt a wait-and-watch approach as the market navigates through this period of heightened volatility driven by global trade tensions.

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Published on April 7, 2025