- Sensex and Nifty plunged nearly 5% amid global market turmoil.
- China imposed 34% tariffs on US goods, escalating trade war tensions.
- IT and export-driven stocks suffered heavy losses due to US exposure.
Indian markets witnessed a dramatic sell-off on Monday, with the Sensex tumbling nearly 4,000 points and the Nifty breaching 21,800, as fears of a global trade war triggered panic.
The crash wasn’t isolated to India. Global markets from Japan to the US saw steep declines, with key Asian indices like the Hang Seng and Nikkei falling sharply.
Trade War Fallout: Why Indian Markets Plunged to Pandemic-Era Lows
The sudden crash in Indian stock markets is being traced back to the intensifying trade war between the US and China. Over the weekend, Beijing imposed a hefty 34% tariff on US goods, signaling the start of an aggressive economic standoff. This sparked fears that global trade and supply chains could face long-term disruptions, leading to widespread investor panic.
Wall Street’s Friday losses spilled over into Asia, triggering a regional market rout. Trading in Japanese futures was halted due to circuit breakers, and China’s indices also tanked. These global cues weighed heavily on Indian markets, which saw their worst opening since the COVID-19 crash of 2020.
The worst-hit were sectors closely tied to global trade—especially IT and metals. Companies like Tata Steel, Tech Mahindra, and Tata Motors saw sharp declines as investors anticipated reduced global demand and possible regulatory barriers. The heavy exposure of Indian IT firms to the US market made them especially vulnerable.
Volatility surged with the India VIX spiking nearly 60%, its highest one-day jump in almost a year. The spike in the volatility index suggests a shift in market sentiment from caution to fear, prompting even long-term investors to consider pulling back. Without clarity on how this trade standoff will evolve, market uncertainty may persist.
Until the trade tensions ease or a diplomatic resolution emerges, markets are likely to remain volatile. Investors should brace for fluctuations and consider focusing on long-term fundamentals.
“When elephants fight, it is the grass that suffers.” — African Proverb
