Concerns over a potential global trade war and the looming threat of a recession in the United States sent shockwaves through the stock markets on Monday, leading to significant declines in the benchmark indices. The Sensex and Nifty experienced their largest drop in a decade, both plummeting by about 3% on this turbulent trading day.
Market Plunge: Sensex and Nifty Dive
At the start of the week, the Sensex opened with a staggering loss of over 3,900 points (5.2%). However, due to a wave of value buying and short covering, it managed to recover some ground, ultimately closing at 73,137.90, down 2,226.79 points or 2.95%. Similarly, the Nifty began the day below the 22,000 mark, falling over 1,100 points before settling at 22,161.60, down 742.85 points or 3.24%.
Surge in Market Volatility
The market’s volatility escalated sharply, with the NSE’s India VIX skyrocketing by an unprecedented 65.63%, ending at 22.79—its highest point since June 2024. This surge marks the most significant one-day percentage increase in the VIX since August 2015.
- Key Market Data:
- Sensex: Closed at 73,137.90
- Nifty: Closed at 22,161.60
- India VIX: Closed at 22.79, an increase of 65.63%
Global Markets React
Asian stock markets followed suit, with major players such as Hong Kong, Taiwan, Japan, Singapore, and China recording declines between 7.3% and 13.2%. The MSCI Asia Pacific Index saw its steepest drop since 2008, while Japan’s Nikkei 225 entered bear territory. European markets also faced downward pressure, falling by up to 4%.
U.S. Indices Feeling the Heat
U.S. stock markets have not been spared either, particularly after the recent tariff announcements by former President Trump. Early trading on Monday saw the S&P 500 drop by 20% from its peak earlier this year, while the Dow Jones fell nearly 17% from its record high.
Investor Sentiment and Market Dynamics
Foreign portfolio investors (FPIs) continued to offload shares worth ₹9,040.01 crore, while domestic institutional investors (DIIs) stepped in as net buyers, purchasing shares valued at ₹12,122.45 crore, according to preliminary BSE data. The overall market saw a staggering erosion of ₹14 lakh crore in investor wealth, bringing the total market capitalization to ₹389.25 lakh crore, with intraday losses reaching over ₹20 lakh crore.
Broader Market Performance
The market breadth was overwhelmingly negative, with 3,515 stocks declining compared to just 570 gainers on the BSE. Broader indices also faced significant losses, with the BSE Midcap and Smallcap indices dropping 8.16% and 10.58%, respectively, during intra-day trading. Although both indices managed to recover some losses, they still ended the day down 3.46% and 4.13%.
- Notable Numbers:
- Declining Stocks: 3,515
- Gainers: 570
- BSE Midcap Decline: 3.46%
- BSE Smallcap Decline: 4.13%
Expert Insights on Market Trends
"The uncertainty stemming from the tariff war is making it difficult for the market to stabilize. Investors are reacting to every headline," commented Nilesh Shah, Managing Director at Kotak AMC. He emphasized that predicting future market movements during such volatile times is nearly impossible.
Shankar Sharma, founder of GQuant, highlighted the challenges of equity investing, noting that the current conditions serve as a stark reminder of the complexities involved in the stock market.
Despite the overall downtrend, some market analysts maintain a positive outlook for India, citing its resilience against short-term global shocks. A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, noted that while the Indian market has faced sharp declines, it remains better positioned than many global counterparts. He pointed out that India’s strong domestic economy and proactive policy measures may help mitigate the effects of external turmoil.
Sector Performance and Notable Stocks
All sector indices on both the BSE and NSE reported losses, with the most affected sectors being metals, real estate, commodities, industrials, and capital goods, each dropping by up to 6.22%.
Among the Nifty 50 stocks, only HUL (+0.24%) and Zomato (+0.22%) managed to close in the green. The biggest declines were seen in stocks like Trent, JSW Steel, Tata Steel, Hindalco Industries, and Tata Motors, which experienced losses of up to 14.7%.
In summary, as the markets navigate this challenging landscape, investors remain cautious, keeping a watchful eye on global developments that could further impact their portfolios.
