Monday mayhem! Sensex crashes over 2,500 pts, Nifty hits 10-month low amid global trade war fears

The market breadth was deeply negative as about 228 shares advanced, 2,474 shares declined

Benchmark indices Sensex and Nifty witnessed a sharp fall of 3 percent each on the morning of April 7 — a drop of this magnitude was last seen on June 7, 2024 — as a wave of risk-off sentiment swept across global markets. Investor anxiety intensified following China’s decision to impose retaliatory tariffs on the US, reigniting fears of a renewed global trade war. Amid the widespread selloff, all Nifty 50 constituents slipped into the red.

In early trade, the Sensex nosedived by over 3,900 points, or 5 percent, while the Nifty plunged as much as 5 percent to hit an intraday low of 21,743 — the steepest drop in terms of percentage since March 2020. Market breadth remained deeply skewed in favour of decliners, with an advance-decline ratio of 1:9.

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Looking ahead, analysts consider the 22,000 mark to be a key support level for the Nifty. They advise investors to adopt a wait-and-watch approach, stay attuned to global cues, and remain cautious in the current volatile environment.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, echoed this sentiment, stating that a "wait and watch" strategy is most prudent amid the ongoing turbulence.

However, he also offered a few points of reassurance. Firstly, he believes the current wave of tariffs, which he described as "irrational Trump tariffs," may not persist for long. Secondly, India remains relatively insulated, as its exports to the US constitute only around 2 percent of GDP, limiting the potential impact on domestic economic growth. Lastly, India is currently negotiating a Bilateral Trade Agreement with the US, which, if successful, could lead to reduced tariffs and support Indian exporters.

From a technical standpoint, the Nifty 50 has formed a bearish candle on the daily chart, indicating selling pressure at higher levels, said Hardik Matalia, Derivative Analyst at Choice Broking.

Immediate support is seen around 22,400 and 22,000 for intraday trades, areas where the index has historically shown resilience. On the flip side, 23,000 is pegged as the nearest resistance level. A sustained move above this threshold could open the door to further gains toward 23,100 and 23,400, Matalia added.

All sectors were deep in the red, with Nifty Metal taking the steepest hit, tumbling over 6 percent. Nifty IT and Nifty Auto also suffered significant losses, declining in the range of 4 to 5 percent.

Meanwhile, India VIX — the volatility index that gauges near-term market sentiment, spiked the most in 10 years, up more than 55 percent, climbing above the 21 mark and indicating heightened fear among investors.

The broader markets were not spared either, with both the midcap and smallcap indices shedding over 3 percent each.

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