Sensex crashes 1,400 points as Trump's reciprocal tariffs spook investors
What's the story
The BSE Sensex and NSE Nifty witnessed a major crash on Tuesday, largely due to fears of US President Donald Trump's proposed reciprocal tariffs.
At the time of writing, the Sensex had plummeted by as much as 1,390 points or 1.8% to hit an intraday low of 76,024, while the Nifty declined by 355 points or 1.5% to hit a low of 23,164 in the day.
Investor reaction
Market response to Trump's proposed tariffs
The market's negative response was largely due to the impending implementation of Trump's reciprocal tariffs, scheduled for April 2.
The US President had previously imposed levies on key trading partners like Canada, Mexico, and China.
He is now considering additional taxes on automobiles, steel, aluminum, copper, pharmaceuticals, semiconductors, and lumber.
V K Vijayakumar from Geojit Investment Services said, "Markets globally are awaiting details of Trump's reciprocal tariffs."
Additional influences
Other factors impacting market
The spike in crude oil prices also added to the market's fall. Brent crude, a global oil benchmark, rose 1.51% to $74.74 per barrel, raising concerns over India's import bill as it is a major oil importer.
Further, Goldman Sachs raised the probability of a US recession from 20% to 35%, citing potential economic impacts of Trump's tariffs and warning about a possible technical recession in the EU.
FII selling
Foreign institutional investors turn net sellers
Foreign institutional investors (FIIs) resumed their selling spree in Indian equities after a brief buying period.
On Friday, they offloaded equities worth ₹4,352.82 crore, adding to the pressure on domestic markets.
This trend of FIIs turning net sellers has further contributed to the market's downturn amid uncertainties surrounding Trump's reciprocal tariffs and rising crude oil prices.
Market corrections
Profit booking after recent market rally
The sharp rise in valuations in a short period has also made some traders cautious, triggering a sell-off in heavyweight stocks.
This comes after the Nifty and Sensex gained nearly 5.4% over the past eight sessions and turned positive for the year.
Vijayakumar noted that "India outperformed most markets in March with a 6.3% return," adding that profit-booking at higher levels was expected due to recent gains.