Stocks pare losses as panic selling slows; buyers step in at oversold levels

Laggards on the Nifty included Trent, JSW Steel, Tata Steel, Hindalco and Shriram Finance.

Dalal Street went into a freefall on April 7, as panic-selling took the benchmark indices sharply lower. Triggered by Donald Trump’s tariff tantrum on Wall Street, a wave of global jitters wiped out a jaw-dropping Rs 16 lakh crore in market value — the sharpest intraday collapse since June 2024. Inflation fears, a looming consumption crunch, and recession fears had investors running for cover as the Nifty and Sensex plunged deep into the red.

However, day-end buying allowed markets to cut their losses with Sensex recovering 800 points from day's low to close 2,226.79 points or 2.95 percent lower at 73,137.90, and the Nifty closed 742.85 points or 3.24 percent lower at 22,161.60. About 559 shares advanced, 3,372 shares declined, and 137 shares were unchanged.

India VIX — the fear gauge of the domestic market — soared as much as 66 percent to 22.85 on April 7, marking its sharpest intraday spike since June 4, 2024, according to Bloomberg data. The dramatic surge has completely erased the downtrend that had been in place since the latter half of January this year.

The fall in Indian benchmarks was much lower than their European and Asian counterparts.

In Asia, the Hong Kong Hang Seng's 13 percent one-day slump was the largest since 1997, while in mainland China the blue-chip CSI 300 index was down 7 percent only finding a floor when state media reported China's sovereign fund Central Huijin was a buyer.

European stocks tumbled, dropping to the lowest since January 2024 as investors priced in significant economic repercussions from the global trade war initiated by Trump’s aggressive new tariff regime.

The Stoxx Europe 600 Index sank as much as 6.5 percent, extending losses after its biggest weekly decline since March 2020. The gauge was trading 5 percent lower as of 11 a.m. in London, marking a level last seen at the beginning of 2024. The DAX was 5.4 percent lower after plunging as much as 10 percent.

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"The primary reason behind the selloff is the fear of a full-blown global trade war and its potential to tip the world economy into a recession. Countries including China, Canada, and the European Union have spoken about retaliatory tariffs on American goods, and the uncertainty around whether a settlement can be reached before the next phase of tariff hikes is causing widespread nervousness," Siddhartha Khemka, Head of Research and Wealth Management said in a conversation with Moneycontrol.

Khemka advised against panic selling or making adventurous bets. Instead, he recommended a disciplined, long-term approach. Investors should use the correction to gradually accumulate fundamentally strong, domestically focused companies, particularly in consumption, financials, and banks. These areas are better positioned to weather global headwinds compared to globally exposed sectors like IT, pharma, and metals.

He added that domestic themes such as consumption remain India’s strongest long-term bet. While they may not deliver outsized short-term returns, they are likely to hold up better in a downturn. Crude-linked sectors such as oil marketing companies and aviation could also benefit from falling oil prices.

Among sectoral indices, Nifty Metal was the top loser, nosediving 7 percent led by Tata Steel, JSW Steel, Hindalco, and Hindalco were the main drags. Nifty Realty, Auto, Bank, Infra, IT, Oil and Gas, and Pharma all fell in the range of 3-4 percent each.

The broader market, represented by mid and smallcap 100 indices also showcased bearish trends with losses of 4 percent each. Khemka said the space is more vulnerable to a slowdown because they have limited geographical and product diversification and are more exposed to demand shocks.

Tata Motors, India's leading EV player, cracked over 8 percent after its subsidiary, Jaguar Land Rover Ltd announced that it will be pausing shipments to the US for the month of April, in response to the tariffs imposed by US President Donald Trump on imports of automobiles and auto parts into the US. JLR last week said that it will be pausing shipments to the US for a month as it assesses the impact of the tariffs on vehicle imports.

Siemens India shares nosedived over 50 percent on Monday, April 7, as the stock turned ex-demerger. It opened at Rs 2,450, a steep fall from its previous close of Rs 4,928.15, before clawing back some ground to trade around Rs 2,836.75. The demerger was carried out in a 1:1 ratio, entitling eligible shareholders to one share of Siemens Energy India for every share held in Siemens India as of the record date, April 7. The cut-off to qualify for the corporate action was Friday, April 4.

"The trend-deciding level for the day is 22,992. If Nifty trades above this level, it may further rally up to 23,127-23,349-23,484 levels. However, if it trades below 22,992 levels, we may witness profit booking in the market, and the index may correct up to 22,770-22,635-22,412 levels," Axis Securities said in a note.

"The trend-deciding level for the day is 51,586. If Bank Nifty trades above this level, it may rally up to 51811-52,119-52,344 levels. However, if it trades below 51,586 levels, we may witness profit booking in the market, and the index may correct up to 51,278-51,052-50,744 levels," the brokerage added.

FMCG bellwether Hindustan Unilever was the only gainer on the Nifty. Laggards on the Nifty included Trent, JSW Steel, Tata Steel, Hindalco and Shriram Finance.

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