Sensex, Nifty record steepest single-day decline in 10 months as trade war fears wreak havoc

NEW DELHI: Benchmark indices Sensex and Nifty logged their worst single-day decline in 10 months, as fears that Trump's policies on reciprocal tariffs may lead to recession and higher inflation in the US going ahead unnerved investors.

With Monday's sharp fall, the benchmark indices suffered one of their worst declines in five years.

In a horrible day for investors, the 30-share BSE benchmark Sensex tanked 2,226.79 points, or 2.95 per cent, to settle at 73,137.90. During the day, the benchmark index slumped 3,939.68 points, or 5.22 per cent, to 71,425.01.

The NSE Nifty tumbled 742.85 points, or 3.24 per cent, to settle at 22,161.60. Intra-day, the benchmark dropped 1,160.8 points, or 5.06 per cent, to 21,743.65.

Prior to Monday's debacle, on June 4 last year, the Sensex nosedived 4,389.73 points, or 5.74 per cent, to close at 72,079.05. In the day trade, the barometer tanked 6,234.35 points, or 8.15 per cent, to 70,234.43.

The Nifty ended at 21,884.50, a sharp decline of 1,379.40 points, or 5.93 per cent on June 4, 2024. Intra-day it tumbled 1,982.45 points, or 8.52 per cent, to 21,281.45.

Sensex and Nifty had previously tumbled over 13 per cent on March 23, 2020 when lockdown was imposed due to the Covid-19 pandemic.

"Equity markets witnessed a sharp fall, tracking global sell-off sparked by the US reciprocal tariffs and China's announcement of retaliatory tariffs of 34 per cent on US goods. At the market opening, Nifty 50 tanked 5 per cent -- its worst opening since March 2020 (Covid-19 pandemic). This marked the sharpest single-day fall since June'24, when the indices had plunged more than 8 per cent.

"Market showed some recovery towards the end of the session," Siddhartha Khemka, Head -- Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

Selling pressure was rampant across the board as all BSE sectoral indices ended with deep cuts. Metal tumbled 6.22 per cent, realty dropped 5.69 per cent, commodities (4.68 per cent), industrials (4.57 per cent), consumer discretionary (3.79 per cent), auto (3.77 per cent), bankex (3.37 per cent), IT (2.92 per cent), teck (2.85 per cent), and BSE-Focused IT (2.63 per cent).

"After US markets plunged on Friday, it was writing on the wall for other global equity indices which fell like a pack of cards amid fears that Trump's policies on reciprocal tariffs may lead to recession and higher inflation in the US going ahead. Already, commodity prices of crude oil and several metals are seeing a downward slide, which is an indication of a slackening demand if the current trend persists," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

All Sensex firms, except for Hindustan Unilever, ended lower. Tata Steel fell the most by 7.73 per cent followed by Larsen & Toubro which cracked 5.78 per cent.

Tata Motors, Kotak Mahindra Bank, Mahindra & Mahindra, Infosys, Axis Bank, ICICI Bank, HCL Technologies and HDFC Bank were the other big laggards.

Hindustan Unilever ended marginally higher.

"Global markets reeled as US President Donald Trump unleashed a fresh wave of tariffs, calling it 'Liberation Day'. The move sparked immediate retaliation from China, which imposed a 34 per cent tariff on US goods.

"Wall Street responded with its sharpest drop in months, wiping out over USD5 trillion in value, and Asian markets mirrored the sell-off on Monday," Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher, said.

The impact on Indian equities was severe, he noted.

"For now, markets may remain on edge as global uncertainties continue to weigh on risk appetite," Kasat added.

Markets across the globe bore the brunt of US President Donald Trump's tariff hikes and retaliation from China.

In Asian markets, Hong Kong's Hang Seng index tanked more than 13 per cent, Tokyo's Nikkei 225 plunged nearly 8 per cent, Shanghai SSE Composite index dropped over 7 per cent and South Korea's Kospi sank over 5 per cent.

European markets, too, came under heavy selling pressure and were trading with over 4 per cent decline.

US markets ended significantly lower on Friday. The S&P 500 tanked 5.97 per cent, Nasdaq composite slumped 5.82 per cent, and the Dow tumbled 5.50 per cent on Friday.