Sensex Down 800 Points, Nifty Below 23,000; Know Key Reasons Behind Today’s Market Crash

The Indian equity markets reported heightened selloffs on April 4 as benchmark indices fell by over 1%. The downtrend came on the back of reciprocal tariff announcements by US President Donald Trump and concerns of looming trade war.

Sensex was down by 820.15 points or 1.07% to hit an intraday low of 75,475.21, while Nifty tumbled 313.95 points or 1.35% at 22,936.15.

Shares of Tata Motors, Tata Steel, Larsen & Toubro, Maruti Suzuki India, IndusInd Bank, Infosys, HCL Technologies, NTPC, Tech Mahindra, Sun Pharmaceutical Industries and Adani Ports came under intense pressure.

Let’s try to understand the possible reasons behind today’s fall

1. Global trade war concerns

The reciprocal tariffs levied by the United States has sparked uncertainty in the global markets coupled with fears of full-blown trade war. China and Canada are vowing for countervailing measures, adding to the nervousness among investors.

“Markets are going through heightened uncertainty which is likely to persist. A global trade war has been triggered by the US, and retaliatory tariffs from China, the EU and others are now expected. This will prolong volatility and hurt global growth,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Trump administration has announced a 26% tariff on Indian goods, along with a 10% baseline duty on imports from other nations. In retaliation, Canada imposed a 25% tariff on several US vehicles, while China demanded immediate withdrawal of the new duties and warned of firm counter steps.

2. Negative global cues

US equity markets fell to the lowest levels since 2020 as the S & P 500 went down by 4.9%, while Nasdaq 100 crashed by 5.5%. Investors lost nearly $2.5 trillion.

Asian markets also witnessed a major turnaround as Tokyo's Nikkei was down by 3% and Seoul's KOSPI slipped by nearly 2%.

3. Potential sectors came under fire

All the 13 major sectoral indices on NSE traded in the red. Pharma Stocks came under intense pressure after US President Donald Trump noted about levying potential tariffs on pharmaceutical products, saying his administration was looking at the sector “as a separate category” and could make an announcement “in the near future”.

IT index slumped by 2% as all the constituents were trading in red. Coforge and Persistent Systems emerged among the top losers.

4. Heightened FII selling

FII’s dumped Indian equities worth ₹2,806 crore on April 3, while Domestic Institutional Investors (DIIs) infused ₹221.47 crore on a net basis.

5. Caution ahead of MPC and Fed’s decision

Investors are keeping a close watch on US Federal Reserve Chair Jerome Powell's speech on April 4. RBI MPC is also set to take a call on the repo rate next week.

As per Moneycontrol’s poll of 21 economists, treasury heads and fund managers, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is expected to cut repo rates by 25 basis points (bps) in the upcoming monetary policy on April 9.