Sensex, Nifty crash: Investors lose Rs 13 lakh crore as indices post worst fall in 10 months 

Indian benchmark indices slipped for the third straight session today as recession fears spooked global markets hit by US imposing fresh tariffs on its trading partners on April 2. Investor sentiment was hit after China announced retaliatory tariffs on US goods, raising concerns over a possible escalation into a broader trade war

Sensex ended 2226.79 pts lower at 73,137 and Nifty tumbled 743 pts to 22,161. Investor wealth slipped by Rs 13.58 lakh crore to Rs 389.76 lakh crore today against Rs 403.34 lakh crore in the previous session. 

All Sensex stocks except HUL ended in the red. Tata Steel, Tata Motors, Kotak Bank, M&M, Infosys, Axis Bank and ICICI Bank were the top losers falling up to 7.73%. HUL shares ended 0.25% higher at Rs 2250.15. 

This was the worst crash in ten months. On June 4, 2024, Sensex tanked 4389.73 pts or 5.74% to close at 72,079.05, and Nifty 50 ended at 21,884.50, lower by 1,379.40 or 5.93%. The crash occurred after Lok Sabha poll results fell short of exit polls estimates for the PM Narendra Modi-led BJP National Democratic Alliance (NDA). 

Meanwhile, in the current session, midcaps and smallcap stocks ended deep in the red in the current session. On BSE, the midcap index crashed 1400 pts to 39,107 and the small-cap index fell 1,892 pts to 43,974. 

IT indices slipped for the third straight session today after Trump announced tariffs on trading partners on April 2. The BSE IT index slipped 965 points to 32,110 against the previous close of 33,075. 

Similarly, Nifty IT index tumbled 2.51% or 842 pts to 32,668.

Ajit Mishra – SVP, Research, Religare Broking said, "Technically, a decisive close below the 21,700 level on the Nifty could pave the way for further downside toward 21,300. Conversely, any recovery attempt is likely to face resistance in the 22,500–22,800 zone. Given the prevailing volatility, traders are advised to adopt a hedged approach and manage position sizes cautiously until we see some stability."

Anand K. Rathi, co-founder of MIRA Money said, "We are facing an entirely new world order. As investors, we can only make educated guesses with low probabilities. It is extremely challenging to predict how each country will respond to tariffs. The market is declining rapidly, assuming a global recession, but circumstances can change quickly depending on how and when the tariffs are implemented. Although India stands out among countries and is expected to continue growing at over 6% +, there is a reduced risk premium in the minds of investors. As a result, many may not respect this growth potential. Therefore, it is advisable to avoid making new equity investments until the global situation stabilises. Continuing with Systematic Investment Plans (SIPs) is recommended, and any surplus investments should be directed into long-term treasury funds, such as government bonds or corporate bonds with long maturities. If there is a need to withdraw funds within the next two years, it is better to shift investments into debt instruments, such as short-term government securities or high-quality corporate bonds, even at current levels."

Vinod Nair, Head of Research, Geojit Investments said, "The market tumbled as the carnage over high US tariffs and the retaliation by other countries may kickstart a trade war. Sectors like IT and metals have underperformed relative to the broader market due to the risk of high inflation with slower growth that may result in a potential recession in the US. Though the overall impact on India may be limited when compared with other countries, investors are advised to play cautiously during this fray. Focus will be on pure-play domestic themes, where the rebound is likely to be fair when the dust settles."

Aditya Gaggar, Director of Progressive Shares said, "The immediate support for the Index is seen at 21,750, while resistance lies around 22,300. In the short term, the market's direction is likely to rely on the development around the tariffs; with any positive news potentially triggering a sharp recovery. On the other hand, continued negative sentiment could push the market to lower levels."

Previous session

On Friday, Sensex closed 930 pts lower to 75,364 and Nifty tumbled 345 pts to 22,904. Investor wealth slipped Rs 9.99 lakh crore to Rs 403.34 lakh crore on Friday against Rs 413.33 lakh crore in the previous session.