Sensex, Nifty crash on 'Black Monday': Why stock market fell today?

The gauge of market volatility, Indiaa VIX, spiked nearly 60 per cent to the highest level since June 4

Stock market crash today: Indian benchmark indices opened on a grim note on Monday, weighed down by a global selloff as concerns over growth and fallout from US tariffs deepened the prevailing risk-off sentiment.

 

The BSE Sensex index plunged 3,939 points in the intraday trade to hit a low of 71,425.01 during the day. The NSE Nifty50, meanwhile, breached below the 21,800-mark to hit a low of 21,743. The index dropped 1,160 points intraday, registering its worst fall since June 4 last year.   As of 3:30 PM, the Nifty closed 3.24 per cent lower at 22,161.6, while the Sensex ended 2.95 per cent down at 73,137.9. 

 

In the broader market, the Nifty MidCap index and the Nifty SmallCap index declined as much as 7.5 per cent and 9.92 per cent, respectively. Meanwhile, the gauge of market volatility -- India VIX -- spiked by nearly 60 per cent, to the highest level since June 4. 

 

Indian markets have opened with a significant gap down, mirroring the weak global sentiments, according to Ruchit Jain, head of technical research at Motilal Oswal Financial Services. "In such conditions, the global news flow is likely to depict the near term market moves and hence short term traders should just keep a wait and watch approach for time being." 

 

The heightened uncertainty comes as global stocks rout extended after Beijing announced 34 per cent tariffs on all imports from the US. Japanese futures were suspended due to the market hitting circuit breakers. The benchmark Nikkei 225 lost 5.92 per cent, with the Hang Seng Index declining 8.95 per cent. Meanwhile, mainland China’s CSI 300 fell 5.41%.

 

No one has a clue about how this turbulence caused by Trump's tariffs will evolve, noted VK Vijayakumar, chief investment strategist at Geojit Investments. “Wait and watch would be the best strategy in this turbulent phase of the market.” Domestic consumption themes like financials, aviation, hotels, select autos, cement, defence and digital platform companies are likely to come out relatively unscathed from the ongoing crisis, he said. 

 

Why are markets falling today? Key reasons behind the fall in Nifty, Sensex today:

 

China retaliates: After US President Donald Trump hit China with a 54 per cent to cripple exports to the US, Beijing retaliated with a 34 per cent tariffs on all US imports. Further, China restricted exports of seven types of rare earths, launched an anti-dumping probe into medical CT X-ray tubes from the US and India and imposed export controls on 16 US firms, among other measures.  

 

Trump hit back, saying, "China played it wrong, they panicked — The one thing they cannot afford to do!” The tensions between the world’s biggest economies have caused concerns about slowing global growth and supply chains, according to analysts.  

Global growth fears: Analysts believe that the tariff policies could drive significant inflation in the US, weakening demand and increasing recession risks. Bernstein noted that the tariffs are substantial, with nearly 60 per cent of affected imports now facing duties exceeding 20 per cent, resulting in a weighted average tariff of 28.3 per cent.

 

JPMorgan views the full implementation of these policies as a substantial macro economic shock, not currently incorporated in their forecasts. "This shock will likely be magnified by its impact on sentiment and through the retaliation of countries facing significant increases in their tariff rates."

 

Sectoral impact: India's automobile, information technology, metal, pharma and energy infrastructure were all down 7 per cent on average as escalating fears over global trade tensions intensified following China’s retaliatory tariffs on US goods. Traders also remain on edge as the US president vowed to impose additional tariffs on pharma products. Indian oil marketing companies (OMCs) were hit as crude oil prices extended their rout with Brent crude oil down 2.74 per cent to $63.78 per barrel as of 9:20 AM IST  ALSO READ | Top Losers Today: 50% of Sensex stocks sink over 5%; Tata Motors, RIL, TCS hit 52-week lows

 

FII selloff: The revival in the global funds buying Indian equites reversed as trade tensions peaked. Foreign institutional investors have been net sellers of stocks for five straight sessions, taking the outflow this year to ₹1.5 trillion, according to NSE data. During the same period, domestic institutional investors bought stocks worth ₹1.93 trillion. 

 

Key technicals to watch: The immediate support for Nifty is placed around the previous swing low zone of 22,000-21,700, which, if broken, will open up for a possible move towards the election results day low of 21,300, according to Ruchit Jain.