Why Is the Indian Stock Market Falling Today? Sensex & Nifty Crash Explained

 Why Is the Indian Stock Market Falling Today? Sensex & Nifty Crash Explained

Since Donald Trump introduced tariffs on all trade partners, markets around the world have been sharply declining.

Indian markets suffered a significant blow on Monday amid escalating fears of a global trade war, following U.S. President Donald Trump's announcement of tariffs on all countries. The crash in Sensex and Nifty followed a major sell-off on Wall Street and declines in key Asian markets such as Japan, Singapore, and China.

At Monday’s opening bell, both the Sensex and Nifty plunged nearly 5%. The Sensex dropped sharply by 3,939.68 points to 71,425.01, while the Nifty sank 1,160.8 points to 21,743.65 in early trade.

IT stocks, heavily reliant on revenue from the U.S., were among the hardest hit. Tata Steel saw a sharp decline of over 8%, while Tata Motors fell more than 7%. Other major laggards included HCL Technologies, Tech Mahindra, Infosys, Larsen & Toubro, Tata Consultancy Services, and Reliance Industries.

This marks the worst market opening in India since the Covid-19 pandemic.

Why the markets are crashing:

Global markets have been on a downward spiral following U.S. President Donald Trump’s announcement of tariffs on all American trade partners. The move has sparked fears of a full-blown trade war, with countries like China, Canada, and Mexico already signaling plans for retaliatory action.

Investors were also wagering the imminent threat of recession would outweigh the likely upward shove to inflation from tariffs.

"Both China and Japan index declined by 10 per cent and 8 per cent, respectively. This escalates the stakes in the ongoing trade war and raises concerns about a potential global recession that could affect everyone. On Friday, the US S&P 500 dropped by 6 per cent, and the Dow Jones fell more than 2,000 points, marking its worst week since the COVID-19 crisis. This came after China announced it would impose reciprocal 34 per cent tariffs on all US imports starting April 10," Vikas Jain, Head of Research at Reliance Securities, told news agency PTI.

The sharp increase in tariffs by both the US and China could lead to higher inflation, slower global growth, and intensify trade tensions, he added.

U.S. consumer price data, set to be released later this week, is expected to show a 0.3% increase for March. However, analysts believe it's only a matter of time before the newly imposed tariffs lead to a sharp surge in prices—impacting everything from groceries to automobiles.

The rising costs are also likely to squeeze corporate profit margins, just as earnings season kicks off. Major U.S. banks are set to report results on Friday, with around 87% of publicly traded companies scheduled to release earnings between April 11 and May 9.

In a note, Goldman Sachs analysts said, “We anticipate that fewer companies than usual will offer forward guidance for both Q2 and full-year 2025 during the upcoming earnings calls.”

They added, “As tariff rates rise, many companies will be forced to either increase prices or accept shrinking profit margins. We expect consensus profit margin estimates to be revised downward in the coming quarters.”

Federal Reserve Chair Jerome Powell on Friday stated that Trump’s newly announced tariffs are “larger than expected,” warning that they are likely to impact both inflation and economic growth. He also noted that the overall outlook for the U.S. economy remains uncertain.

The Nasdaq officially slipped into bear market territory on Friday, as oil prices and other commodities tumbled amid a widespread global sell-off triggered by Trump’s sweeping tariff announcement earlier in the week.