Investors Lose ₹19 lakh crore; Sensex Crashes by 3,000 Points, Nifty Below 21,800

Indian benchmark indices came under intense pressure on April 7 on the back of heightened selloffs, majorly triggered by escalating trade tensions and rising recessionary concerns in the U.S.

As of 9:16 am, Sensex crashed by 3,072 points, or 4.09%, to 72,296, while the Nifty50 tumbled by 1,146 points, or 5%, to 21,758 – the steepest fall since June.

The market capitalisation of BSE-listed companies fell by ₹19.4 lakh crore to ₹383.95 lakh crore.

Majority of the sectors were trading in red, with Nifty Metal and Nifty IT falling over by 8% and 7% respectively. Nifty Auto, Realty, and Oil & Gas fell by more than 5% each. In the broader market segment, small-cap and mid-cap indices declined by 10% and 7.3%, respectively.

Here are the key reasons behind the stock market decline

1. Nasdaq spoils the party

Nasdaq index came under intense pressure on Friday (April 7), plunging more than 20% from its recent peak. The decline can be attributed to U.S. President Donald Trump’s announcement regarding retaliatory tariffs in the previous week. The magnitude of tariffs have sparked fears of economic slowdown, thereby triggering sharp selloffs in the equity markets.

Fed Chair Jerome Powell raised concerns about the declining economy and said that tariffs were “larger than expected” and warned they could significantly impact both inflation and economic growth

2. Global Selloffs

Indian equities plunged on the back of surging declines across major global markets. Asian markets tumbled across the globe. While Japan’s Nikkei fell by 7%, South Korea’s Kospi and China’s blue-chip index shed by 5% and 7% respectively. The Hang Seng index slumped over 10.5%.

The U.S. futures extended their declining spree as Nasdaq future and S&P 500 came down by 4% and 3.1%, respectively. European markets traded in red.

3. Recessionary fears

As per market participants, concerns pertaining to recession outweigh short-term inflation risks. The U.S. is set to release consumer price index (CPI) data, later this week, as it’s expected to surge by 0.3% in March. Analysts say that levying tariffs will shoot up costs spanning across sectors including groceries and automobiles.

The rising input costs will squeeze corporate earnings. Close to 87% of U.S. companies are set to report results between April 11 and May 9, with major banks among the first to announce earnings.

4. Decline in commodity prices

Commodity prices declined on the back of fears related to weakening demand and economic slowdown. Brent crude fell 6.5%, while WTI and gold dipped by 7.4% and 2.4% respectively.

5. Diverting funds towards safe-haven assets

Investors are shifting their assets to safer assets amid growing fears of a global recession, further pressuring equity markets.The yield on the 10-year U.S. treasury fell 8 basis points to 3.916% as demand for government bonds surged.

6. Trade war tensions

Following China’s decision to impose retaliatory tariffs on a broad range of U.S. goods, fears of uncertainty in the equity markets have remained dampened. The escalating tit-for-tat measures have raised concerns about a slowdown in global trade and economic growth.

As per the investors, prolonged trade tensions between major economies could disrupt supply chains, dampen corporate earnings, and further weaken already fragile global demand.

“Global markets are experiencing heightened volatility driven by extreme uncertainty. No one has a clear sense of how this turbulence triggered by Trump's tariffs will unfold. A ‘wait and watch’ approach may be the best strategy in this phase of market instability,” said Dr. V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.