MUMBAI: There was bloodbath in stock markets around the world - from Japan to the US - as Donald Trump's decision to impose high import tariffs on almost all its major trading partners raised fears of a global recession combined with higher inflation, a double whammy for economies that policymakers call 'stagflation'.
The CBOE Vix Volatility index, known as Wall Street's fear gauge, rose to levels last seen during the pandemic-induced sell-off in March 2020.
After Friday's market rout around the world that continued in Asia Monday, Dalal Street started trading with the sensex and the Nifty both deep in the red, down more than 4% each. These indices remained in the red zone through the session but made a partial, smart recovery during the last hour. At close, sensex was down 2,227 points or 3% at 73,138 points while Nifty was down 743 points or 3.2% at 22,162 points. The day's loss in the sensex was the sixth biggest in its history.
The day's sell-off left investors poorer by Rs 14.2 lakh crore with BSE's market capitalisation now at Rs 389.3 lakh crore. This was the third biggest single-day plunge in investors' wealth ever.
Among the 30 sensex constituents, only one, HUL, closed with a marginal gain. In the broader market, the advance-decline ratio was skewed in favour of declines: 3,515 stocks closed in the red, 570 in green.
Top fund managers and strategists said world markets were in unknown territory, and hence risks are high. However, they said given India's small share in global trade, the impact could be limited.
At ₹9,040cr, foreign funds lead selloff
The Indian markets had weathered the storm last week, shedding 1.6-1.8% in two trading sessions. In contrast, between April 2, the day the new tariff proposals were announced, and April 4, Nasdaq Composite lost over 10%, S& plunged 9.4%, Dow Jones slid 7.9% and Nikkei in Japan was down 5%.
"Markets are unable to quantify the uncertainty unleashed by the tariff war," said Nilesh Shah, MD, Kotak Mahindra Mutual Fund. "It is reacting to every news coming through. (It's) likely that the unfolding events will keep sellers on an aggressive sell mode and buyers on a reluctant buy mode."
In an uncertain world, India could still be relatively insulated, said A Balasubramanian, MD & CEO, Aditya Birla Mutual Fund. "India's domestic fundamentals remain strong, with a large economy and minimal direct impact from the tariff changes. Additionally, falling oil prices could help reduce inflation, potentially leading to rate cuts that would support growth." India may be insulated from any global shocks owing to its strong domestic economy and policymakers stepping in to make some course corrections to bring stability and execution of policies, he said.
On Apr 9, RBI will announce its decision on interest rates and most economists and analysts expect at least a 25 basis points (100 basis points = 1 percentage point) cut.
While such decisions by the central bank and the govt could support the domestic market from sliding, "any signs of stabilisation or improvement on the global front are likely to ignite a powerful (rally) in the Indian market," said Rajesh Bhosale, an analyst with Angel One. He feels that the recovery in the domestic market during Monday's last hour of trading highlighted the inherent strength of domestic investors.
Monday's sell-off was led by foreign funds that net sold stocks worth Rs 9,040 crore. Domestic funds, however, were net buyers with a net inflow of Rs 12,122 crore.
In Asian markets, Hong Kong's Hang Seng index tanked more than 13%, Tokyo's Nikkei 225 plunged nearly 8%, Shanghai SSE Composite index dropped over 7% and South Korea's Kospi sank over 5%.
With most of the US indices deep in the red in early trades, social media chatter indicates another session of losses for Dalal Street investors on Tuesday. Added to the market's jitters is fresh nervousness following Trump's threat to impose an additional 50% duty on China if it did not withdraw the 34% retaliatory tariff on the US.
The CBOE Vix Volatility index, known as Wall Street's fear gauge, rose to levels last seen during the pandemic-induced sell-off in March 2020.
After Friday's market rout around the world that continued in Asia Monday, Dalal Street started trading with the sensex and the Nifty both deep in the red, down more than 4% each. These indices remained in the red zone through the session but made a partial, smart recovery during the last hour. At close, sensex was down 2,227 points or 3% at 73,138 points while Nifty was down 743 points or 3.2% at 22,162 points. The day's loss in the sensex was the sixth biggest in its history.
The day's sell-off left investors poorer by Rs 14.2 lakh crore with BSE's market capitalisation now at Rs 389.3 lakh crore. This was the third biggest single-day plunge in investors' wealth ever.
Among the 30 sensex constituents, only one, HUL, closed with a marginal gain. In the broader market, the advance-decline ratio was skewed in favour of declines: 3,515 stocks closed in the red, 570 in green.
Top fund managers and strategists said world markets were in unknown territory, and hence risks are high. However, they said given India's small share in global trade, the impact could be limited.
At ₹9,040cr, foreign funds lead selloff
The Indian markets had weathered the storm last week, shedding 1.6-1.8% in two trading sessions. In contrast, between April 2, the day the new tariff proposals were announced, and April 4, Nasdaq Composite lost over 10%, S& plunged 9.4%, Dow Jones slid 7.9% and Nikkei in Japan was down 5%.
"Markets are unable to quantify the uncertainty unleashed by the tariff war," said Nilesh Shah, MD, Kotak Mahindra Mutual Fund. "It is reacting to every news coming through. (It's) likely that the unfolding events will keep sellers on an aggressive sell mode and buyers on a reluctant buy mode."
In an uncertain world, India could still be relatively insulated, said A Balasubramanian, MD & CEO, Aditya Birla Mutual Fund. "India's domestic fundamentals remain strong, with a large economy and minimal direct impact from the tariff changes. Additionally, falling oil prices could help reduce inflation, potentially leading to rate cuts that would support growth." India may be insulated from any global shocks owing to its strong domestic economy and policymakers stepping in to make some course corrections to bring stability and execution of policies, he said.
On Apr 9, RBI will announce its decision on interest rates and most economists and analysts expect at least a 25 basis points (100 basis points = 1 percentage point) cut.
While such decisions by the central bank and the govt could support the domestic market from sliding, "any signs of stabilisation or improvement on the global front are likely to ignite a powerful (rally) in the Indian market," said Rajesh Bhosale, an analyst with Angel One. He feels that the recovery in the domestic market during Monday's last hour of trading highlighted the inherent strength of domestic investors.
Monday's sell-off was led by foreign funds that net sold stocks worth Rs 9,040 crore. Domestic funds, however, were net buyers with a net inflow of Rs 12,122 crore.
In Asian markets, Hong Kong's Hang Seng index tanked more than 13%, Tokyo's Nikkei 225 plunged nearly 8%, Shanghai SSE Composite index dropped over 7% and South Korea's Kospi sank over 5%.
With most of the US indices deep in the red in early trades, social media chatter indicates another session of losses for Dalal Street investors on Tuesday. Added to the market's jitters is fresh nervousness following Trump's threat to impose an additional 50% duty on China if it did not withdraw the 34% retaliatory tariff on the US.
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