Stock Market Crash: Indian market nosedived sharply on Tuesday, after a three-day long weekend. The upcoming Trump's Liberation Day has kept equity market on its edge, compared to other assets-class. The start of April month is with Sensex free falling by 1.7% and struggling to maintain its 76,000 mark. Meanwhile, Nifty 50 dropped by 1.5% and erased its 23,200 tone. Both Indian benchmarks were top performers in March with gains of 5-6%, compared to Wall Street and other markets.
Sensex, Nifty:
Sensex nosedived by a whopping 1,333.12 points or 1.72% to hit an intraday low of 76,081.8. With that Sensex is performing near its two-month low.
On the other hand, Nifty 50 dropped by 346.25 points or 1.47% to hit an intraday low of 23,173.10. India's volatility index surged over 8%.
Benchmarks continue to trade near their day's low.
1. Heavyweight Stocks:
Major heavyweight stocks witnessed sharp selling such as Bajaj Finserv, HDFC Bank and Bajaj Finance were down by 3% to 3.5%. Tech biggies like Infosys, HCL Tech, Tech Mahindra, and TCS nosedived by more the 2% each.
Most valued stock Reliance was also down by over 1%. On Sensex, of the total 30 large-cap scrips, 28 stocks were in deep red, and only two stocks surged.
Meanwhile, in case of Nifty, of its 50-scrip, 36 stocks traded bearish and 14 stocks were performing positive.
2. IT And Consumer Goods Stocks Lead In Downfall:
Except for media and oil & gas stocks, all other sectoral indices were in red. In percentage terms, Nifty Realty index took major beating with downside of 3.2%. Also, Nifty Pharma, Nifty Private Bank, Nifty Metal, Nifty FMCG, and Nifty Auto were down from marginal to nearly 1.5%.
But the bearish trend was led by IT stocks and consumer durable stocks.
Nifty IT index plunged by 2.2%, and Nifty Consumer Durables index was down 2%.
Giants like Voltas, Amber, BlueStar, Titan and Havells were biggest losers in the consumer durables section. In the case of Nifty IT index, all stocks were in free fall. Persistent, Coforge, Infosys, OFSS, HCL Tech, and LTIMindtree plummeted by 3% to 4.5%.
The performance in IT and consumer durable stocks turned extreme bearish is owing to their Q4 quarterly results preview.
For consumer durables, brokerage Emkay Global said, "Overall demand remained stressed as consumer downtrading persisted." It believes that the sector's defensive nature is being tested with the sector's forward P/E hovering near historical means in the quest for demand recovery (recovery hope continues to see a two-quarter roll over) and ease in raw material prices.
In its Q4 preview for consumer goods, Emkay said, "We believe these two factors being unfavorable have caused players' Q4FY25 earnings to be subdued - like Q3. Higher promotion intensity is seen across categories which is likely to have a bearing on margins."
A similar trend is expected in IT sector earnings as well for Q4 FY25.
On tech earnings, Emkay's note said, "QoQ growth is expected to remain muted in Q4. All tier-1 companies are expected to report either a flattish trend or a sequential decline in revenue growth, while LTTS, PSYS, ECLX, MPHL, and COFORGE are likely to lead the growth in our tier-2 coverage. We have been optimistic about recovery in discretionary spending given the improving macro environment, leading to uptick in revenue growth in CY25/FY26. However, increased probability of slowdown/recession in the US with implementation of tariffs is expected to impact growth and tech spending, especially discretionary spending."
3. Global Market:
Global market cues are seeing significant decline due to upcoming Liberation Day of Donald Trump where he will announce a host of tariffs on imported goods and products, which is expected to stir a trade war globally and recession in largest economy, USA.
As per Trading Economics, caution persisted as traders continued to monitor developments in global trade ahead of the US tariffs announcement. The BSE Sensex hit a near two-month low, tracking a decline in Wall Street's Nasdaq on Monday amid escalating concerns over global trade.
Equities globally faced setback as gold and crude oil prices surged, while the dollar traded range-bound. Also, treasury yield performed stable due to global uncertainties.
Comex gold extended its record rally to hit a new lifetime high of 3148.41 per ounce on Tuesday. Investors' appetite increased for haven assets as President Donald Trump's tariff implementation on April 2nd, escalated concerns of a global trade war.
The US dollar performed around 104, while the 10-year US Treasury Yield benchmark also floated around 4.2%, after falling for two sessions straight. Investors are cautious about the dollar and yields as they await clarity on the economic outlook.
Brent Crude and US WTI surged to $74.9 per barrel and $71.6 per barrel on Tuesday, extending their winning streak for the second session in a row. Crude oil is over one month high level.
Rahul Kalantri, VP of Commodities, Mehta Equities said, "Oil prices surged to a six-week high as geopolitical tensions escalated, raising supply concerns. The U.S. President has threatened tariffs on Russia if no Ukraine peace deal is reached and imposed sanctions on Iranian oil exports. Further fuelling uncertainty, the U.S. has hinted at possible military action against Iran, intensifying tensions in the Middle East. While supply fears continue to drive oil prices higher, potential downside risks stem from weakening global economic sentiment and the U.S. President's upcoming reciprocal tariffs, which could weigh on future demand."
5. Trump's Tariff Turbulence:
As per Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, globally markets are focused on the details of Trump's reciprocal tariffs to be announced tomorrow. The market trends after the announcements will depend on the details of the tariffs and how they will impact different countries and sectors.
He added, that India outperformed most markets in March with a 6.3% return. FIIs turning buyers and the consequent short covering contributed to the rally. Can the rally continue or will there be another downturn? This will depend mainly on what Trump announces in tariffs. If the tariffs are lower-than-feared there can be a rally in the market which will be led by externally linked sectors like pharmaceuticals and IT. On the other hand, if the tariffs are severe there can be another round of downturn in the market. Investors can wait and watch and respond after the details are known.
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