Trump tariffs cause turmoil across the world, Indian stock market crashes, what next
#News Bureau April 7,2025
Indian stock markets opened with a massive drop on Monday, a result of global panic created by rising fears of a global trade war and concerns of a possible recession in the USA. Key index Nifty 50 slipped more than 4% in early trade, while the BSE Sensex also fell by nearly 4%. This decline has brought to the fore the volatility prevailing in global financial markets.
At 11:18 am, the Nifty 50 was down 4.03% and was trading at 21,982.05. It had gone down by 5% in the early hours. The BSE Sensex was also down 3.86% at 72,455.5. This is the biggest decline for both these indices since March 2020. Global economic uncertainty has set in.
However, there were worrying signs even before the markets opened. Economic analysts had warned of a volatile session, but the surge in selling outpaced all predictions and sent Mumbai’s financial sector into a tailspin. The root cause of this market crisis began in the US, where President Donald Trump announced sweeping reciprocal tariffs on Wednesday. Federal Reserve Chairman Jerome Powell described these tariffs as “larger than expected”, raising investors’ fears of supply chain disruptions, rising costs and a slowdown in global economic growth.
On Friday, Powell warned of an “uncertain outlook” for the US economy and said tariffs could increase inflation and hurt growth. The Nasdaq index officially entered bearish territory after his statement. Global markets saw a sharp decline, with oil prices and other commodities plummeting. Asian markets were no exception—the MSCI Asia (excluding Japan) index fell 7.6%, while Japan’s Nikkei 225 fell 7%.
India, being a major emerging market and dependent on global trade and US revenues, was hit immediately and severely. “With export-oriented sectors having a large share in the Nifty 50, it is under heavy pressure amid fears of a slowdown,” said Vineet Bolinkar, head of research at Ventura Securities. Metals and financials were the worst hit sectors, with the Nifty Metal index down 7% and the Nifty Financial Services index down 4%.
There was no respite for any segment of the market as all 13 major sectors registered losses. Information technology (IT) stocks, which are heavily dependent on US clients, were the worst hit. The Nifty IT index fell 7%, marking its biggest weekly decline since March 2020. The small-cap and mid-cap indices also fell 5.9% and 4.8%, respectively, as risk aversion gripped the market.
India’s Nifty volatility index (VIX), known as the “fear index”, jumped 57% to 21.55—its highest level since June 4, 2024, and its biggest single-session rise in a decade. “Investor confidence has been shaken. Reciprocal tariffs, even if temporary, add to the uncertainty for companies and investors,” said Sanjeev Prasad, an analyst at Kotak Institutional Equities.
India’s decline mirrored a broader sell-off in Asia. Besides the losses in the MSCI Asia and Nikkei, markets from Seoul to Singapore were sharply lower, underscoring the interconnectedness of global finance. Tariff hikes and retaliatory actions from China have raised fears of a prolonged economic stagnation that has caught emerging markets like India in a bind.
“The performance of Indian markets in the coming weeks will depend on whether there is a reconciliation in the tariff situation or further reaction,” Prasad said. The behavior of India’s retail and institutional investors will also be important in deciding the short-term direction of the market.
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This decline comes at a particularly delicate time for India. The Nifty 50 is down 13% from its record high of September 2024, hit by a slowdown in corporate earnings and foreign capital outflows of $27 billion. The Reserve Bank of India (RBI) is scheduled to announce its monetary policy on Wednesday. A rate cut of 25 basis points is expected to mitigate the impact of US tariffs.
Analysts warn that India’s export-oriented sectors—IT, metals, and pharmaceuticals—could remain under pressure for a long time if trade tensions continue. Meanwhile, the rupee is already under pressure and is at risk of falling further due to capital flows to safe assets such as the US dollar and gold.
For now, cautious pessimism is the order of the day in Mumbai’s trading halls. “We will remain cautious in the near term due to tariff-related uncertainty,” said Abhishek Goenka, founder and CEO, India Forex and Asset Management. He predicted that Nifty50 could revisit the recent low of 21,800 if the global sell-off intensifies.
