Reasons Behind the Plunge of the Indian Stock Market
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Synopsis
The Indian stock market has seen a drastic fall due to escalating trade tensions between the US and China, resulting in significant losses for investors and widespread declines across various sectors.
Key Takeaways
- Sensex fell nearly 3,000 points.
- Nifty dropped below 22,000.
- Trade tensions between US and China are escalating.
- Investor fears of global recession are growing.
- All sectoral indices on the BSE were negative.
Mumbai, April 7 (NationPress) The Indian stock market experienced a significant sell-off on Monday, triggered by the escalating trade conflict between the United States (US) and China, which sent ripples through global financial markets.
The Sensex plummeted by nearly 3,000 points, while the Nifty fell beneath the critical 22,000 mark, erasing lakhs of crores in investor wealth.
By midday, the Sensex was recorded at 72,385.4, down 2,979 points or 3.95 percent, and the Nifty dropped 976.1 points or 4.26 percent to 21,928.3.
The primary catalyst for Monday’s decline was the escalating trade dispute between the two largest economies worldwide.
Following the US's announcement of comprehensive tariff increases, China retaliated with its own duties on numerous American goods.
This back-and-forth has sparked concerns of a prolonged trade war, which could hinder global economic growth and disrupt manufacturing and supply chains.
Investors globally are becoming increasingly anxious that these trade tensions will dampen global demand, inflate costs for businesses, and diminish corporate earnings.
The apprehension of a worldwide recession has further unsettled investors.
This uncertainty has led to extensive selling across equity markets, particularly impacting Asia.
Japan’s Nikkei fell by 7 percent, South Korea’s Kospi decreased by 5 percent, and Hong Kong’s Hang Seng dropped over 10.5 percent.
The negative sentiment also affected India, where all 13 sectoral indices on the BSE were in the red.
The Nifty Metal index fell by 8 percent, while Nifty IT dropped more than 7 percent due to concerns regarding US exposure.
Sectors like auto, real estate, and oil and gas also experienced declines exceeding 5 percent. The sell-off was more pronounced in the broader market, with mid-cap and small-cap indices losing 7.3 percent and 10 percent, respectively.
Among the top losers on the Sensex were Tata Steel, which dropped nearly 10 percent, followed by Tata Motors, Infosys, L&T, and Tech Mahindra, each falling between 6 percent and 8 percent.
