The Nifty fell a huge 140 points in morning trade, as tensions over trade barriers mounted after US President Donald Trump instructed US Trade Representative Robert Lighthizer to slap tariffs on at least $50 billion in Chinese imports.
Asian markets dive
It was a sea of red across the Asian markets after the Dow Jones fell 700 points. The Japanese market was the worst impacted with the Nikkei falling a huge 3.9 per cent, led by losses in Toyota and Sony.
In Korea, the Kospi lost as much as 2.2 per cent, as stocks led by Samsung declined sharply. The Hong Kong's Hang Sang and the Shanghai Composite also fell sharply dropping as much as three per cent.
In Mainland China, the drop was led by names like Baoshan Iron & Steel and Aluminium Corporation of China. Fall in stocks was largely linked to major exporters of goods, particularly to the US.
Indian markets see metal stocks falling
Across the Indian markets too the mayhem spread with the midcap and the small cap seeing even worse losses, as investors hammered down shares. Metal stocks were the worst impacted with names like Tata Steel, Vedanta and Hindalco seeing severe losses of 3 per cent above.
Though financials are unlikely to be impacted by way of trade barriers, banking stocks so an onslaught of selling pressure. ICICI Bank and Yes Bank, which saw significant selling pressure on Monday, continued to fall for the second successive day. Several government owned banks like Union Bank and PNB were very close to their 52-week lows. State Bank of India hit a 52-week low of Rs 238 in trade.
The trade war
It all began with the US imposing tariffs on metals to be imported from China a few weeks ago. Following this on Thursday, Trump instructed US Trade Representative Robert Lighthizer to slap tariffs on at least $50 billion in Chinese imports. However, the worry was the escalation as China decided to impose tariffs on US products. This included items like pork, aluminium pipes etc.
On Thursday, the Dow Jones plunged a huge 700 points as worries were that tensions would now only mount.
A 11% drop in the Indian indices
With today's fall the benchmark indices have fallen a good 11 per cent, from peak levels. However, investors are not advised to invest even at these levels, given worsening micros, worries over political developments and rising interest rates in India and the US.
The Nifty had crossed the 10,000 mark for the first time on July 25, 2017, and is now back to where it was.