Sensex, Nifty crash 5% in opening trade; broader markets bleed up to 10%; 297 stocks hit lower circuit

Tracking weak cues from global peers, Dalal Street witnessed sharp selling in opening trade on Monday, with the benchmark indices Sensex and Nifty falling up to 5%. The BSE Sensex belled the day at 71,450, down 3,915 points, or 5.2%, while the NSE Nifty opened 1,146 points, or 5%, lower at 21,758. The sentiment was dented amid fear that a dramatic escalation of a trade war could drag the U.S. and global economies into a recession. 

The broader markets were worst hit as the BSE Midcap index dropped 9%, while the BSE smallcap index crashed over 10% in opening deals.

On the BSE Sensex pack, all 30 index heavyweights were flashing in red, led by Tata Steel, Tata Motors, Tech Mahindra, Infosys, and HCL Tech, falling in the range of 6-10%. On the other hand, Bharti Airtel, HUL, Power Grid, Asian Paints, and ITC saw limited impact, falling marginally by up to 1%.

The market breadth, indicating the overall strength, was weak, with 2,920 out of 3,275 traded shares on the BSE were in negative terrain. As many as 257 stocks were in green, while 98 remained unchanged. The exchange data showed that 297 stocks hit lower circuit.

The sell-off in the market was triggered by sharp correction in the Asian peers, following rout in Wall Street on Friday. The equity markets in Asia-Pacific region crashed up to 10% in early trade, led by Japan, Hong Kong, and South Korea. Japan’s Nikkei index tumbled 7%, while South Korea’s KOSPI plummeted 5%. On the other hand, Hong Kong’s Hang Sang and Taiwan’s Weighted stock index nosedived up to 10%. Singapore’s Straits Times fell 7%, while China’s Shanghai Composite was trading down by 5.5%. Meanwhile, Australia’s ASX 200 index closed 4% lower.

Wait and watch in turbulent market, says expert

"Globally markets are going through heightened volatility caused by extreme uncertainty. No one has a clue about how this turbulence caused by Trump tariffs will evolve.  Wait and watch would be the best strategy in this turbulent phase of the market,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

According to him, there are a few things that investors should keep in mind. One, the irrational Trump tariffs will not continue for long. Two, India is relatively better placed since India’s exports to the U.S. as percentage of GDP is only around 2% and therefore the impact on India’s growth will not be significant. Three, India is negotiating a bilateral trade agreement with the U.S. and this is likely to be successful resulting in lower tariffs for India.

Sector-wise, domestic consumption themes like financials, aviation, hotels, select autos, cement , defence and digital platform companies are likely to come out relatively unscathed from the ongoing crisis. Trump is unlikely to impose tariffs on pharmaceuticals since he is on the back foot now and, therefore, this segment is likely to show resilience, he added.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)