Stock Market Crashed: Why Sensex Fell 860 Pts And Nifty Dropped 340 Pts On April 4? Here Are 7 Reasons!

Stock market crash: The Indian stock market crashed at the opening bell of Friday, April 4th, after Wall Street nosedived sharply and recorded a $2 trillion market rout, the worst since 2020. Sensex dropped by as much as 860 points and erased its 75,500 zone. Similarly, Nifty 50 dipped by nearly 340 points and gave up 23,000 pivotal marl. Auto, metals, and pharma stocks are the biggest losers.

Sensex, Nifty:

Sensex opened at 76,160.09, and soon after decreased by 859.61 points to hit an intraday low of 75,435.75. The benchmark is currently trading at 75,752.83, down by 542.53 or 0.71%, compared to its previous close of 76,295.36.

Nifty 50 slipped by 328.5 points to hit an intraday low of 22,638.21, after opening at 23,190.40 compared to the previous day's closing price of 23,250.10.

At the time of writing, Sensex performed at 75,684.69, down by 610.67 or 0.80%. Nifty traded at 22,993, lower by 257.10 points or 1.11%.

1. Auto Stocks:

Since Trump's 25% tariff on imported auto products came into effect on April 3rd, auto stocks in India have been under pressure, with a sharp selloff in Tata Motors.

Nifty Auto index dropped by 637.35 points or 3.01% to trade at 20,581.20. The biggest losers are Bharat Forge, Tata Motors, Motherson Sumi, Balkrishna, Hero MotoCorp, and Maruti Suzuki shares which plunged by 2.5% to 9%.

Arun Agarwal, VP - Fundamental Research - Automobiles, Kotak Securities said, "US has imposed 25% tariffs on imported cars, light trucks and select auto parts sourced from outside of North America. Further, almost 150 auto parts will face tariffs at a similar rate. This move could result in an increase in car prices in the US and cost pressure for component suppliers. In the event of car prices going up, the US car market may witness a steep volume decline and that can impact revenue for component players supplying parts to the US car/light truck industry. Further, margins of suppliers may come under pressure as they may need to partly absorb cost pressures."

He added, " We believe there will be some impact, which the suppliers will have to bear, leading to negative implications on margins. Having said that, it needs to be seen how higher tariffs are absorbed across the supply chain including customers, OEMs and suppliers. The extent of impact for Indian players will also depend on the US-India bilateral agreement over the next few months."

2. Metal Stocks:

Nifty Metal index plunged by 5.33% to trade at 8,525.20. All stocks are in red, with the most decline seen in Vedanta, NALCO, Hindustan Zinc, Hindalco, Tata Steel and NMDC by 6% to 8%.

Metal stocks are under pressure due to trade war fears after Trump's reciprocal tariff.

3. Pharma Stocks Turn Bearish:

Although, pharma stocks are among the least to be impacted by Trump's reciprocal, Nifty Pharma index nosedived by a whopping 1,214.90 points or 6% to trade at 20,208.65.

Stocks like Laurus Labs, IPCA Labs, Aurobindo Pharma, and Biocon dropped by 6% to 8% as well.

As per Satish Chandra Aluri, Lemonn Markets Desk, with nearly $9 billion in exports to the US and contributing almost a third of total pharma exports, exemption from the new tariffs, was a positive surprise.

4. Midcap And Smallcap Crash:

Nifty Smallcap 100 dropped by nearly 3% to trade at 15,782.95. Hindustan Copper, BEML, GRSE, Angel One, Anant Raj, and IIFL shares dropped by 5% to 7%.

Meanwhile, Nifty Midcap 100 index plunged by 1,222.35 points or 2.3% to trade at 50,939.80. Lupin, Bharat Forge, Aurobindo, Coforge, Mazagon Dock, and Oil India slipped by 6% to 7%.

5. IT Stocks:

Nifty IT index dropped by 3% to trade at 33,713.85, after experts predicted weaker earnings for Q4FY25. The experts predict macro environment will impact Q4 results and FY26 guidance.

Elara Capital said, "There has been no meaningful recovery in the macro environment, especially in the US market, which should weigh on FY26 performance."

Apart from 7% fallout in Coforge, stocks like Persistent, Wipro, Mphasis, and Tech Mahindra were also draggers with a decline of 3% to 5%.

Besides, broadly, all sectoral indices were in red with the exception of mild gains in FMCG stocks. Nifty Media shed 2.3%, while Nifty Consumer Durables dropped by 1.9%. Nifty Oil & Gas index is down by 3.1%.

6. Global Market:

Indian equities tracked its Asian cues that followed the bearish trend of Wall Street. Japan's Nikkei 255 nosedived by nearly 4%. While Hong Kong, South Korea, and Australian benchmarks plummeted between 1.5% to 2.5%.

Overnight, Wall Street crashed with over $2 trillion market rout which was the worst performance since 2020. As per Trading Economics, the Dow tumbled 3.98%, the S&P 500 dropped 4.84%, and the Nasdaq plummeted 5.97% after Trump unveiled a 10% baseline tariff on all imported goods, with even higher levies for key trading partners. The move raised fears of global retaliation, threatening trade stability and economic growth. However, Trump later signalled openness to trade negotiations, contradicting earlier remarks from his aides.

7. Gold, Treasury Yields, Dollar, and Crude Oil Prices:

The dollar index dropped approximately 2% and traded below 102 levels against a basket of currency, as fear of recession escalated due to expectations of retaliation from key trading partners on US after Trump's tariff. The 10-year Treasury yield touched six-month low after hitting below 4%.

On the other hand, gold traded around $3,110 per ounce, pulling back from its $3,167.77 peak, but still on path to record its fifth consecutive weekly gains. Gold witnessed profit booking as investors focus shifted to US non-farm payrolls report and insights of upcoming Federal Reserve rate cut.

Also, Brent crude oil futures fell toward $69 per barrel on Friday, building on a more than 6% drop from the previous session, weighed down by continued pressure from the OPEC+ hike and global trade concerns, as per Trading Economics.

What Should Investors Do?

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, markets are going through heightened uncertainty which is likely to last some time. A trade war has been triggered by Trump and retaliatory tariffs from China, EU and others are on the cards. This will only extend the period of uncertainty and confusion in the market. It appears that contraction in global trade and decline in global growth are inevitable in the present context. Decline in global growth will impact India's growth,too, even though we might do better than other large economies.

Vijaykumar added, "Investors can wait for the dust to settle down. For the short-term, it would be better to focus on domestic consumption driven themes and pharma in the externally-linked segments."