US President Donald Trump announced new measures yesterday to intensify the trade war and cripple Ukraine. He imposed tariffs on China and revealed that a 25% tariff will be implemented on imports from Canada and Mexico. Additional tariff increases will take effect on April 2. These announcements caused a sharp downturn in the US market, which was already struggling. Today, Asian markets also saw significant losses.
Trump also declared the suspension of military aid to Ukraine until the country is ready for peace talks. This move may leave Ukraine vulnerable and could allow Russia to advance further. Market participants are closely monitoring whether sanctions on Russia will be lifted as a result. If the sanctions are removed, it could cause oil prices to surge.
In February, India's factory output dropped to its lowest level in 14 months, according to PMI surveys. Two-wheeler sales also performed poorly in February. Industrial production growth in 2014-25 is expected to decline by 4.3%, down from a 12.3% growth the previous year. This slowdown in growth is dimming expectations for the future.
Against this backdrop, global markets began trading on a negative note today. Key indices, which had previously risen to record highs, dropped by 16%, while mid and small-cap indices fell by 25%. Analysts predict that they will continue to decline. Reliance Industries and other companies with reduced profitability are pulling the market down in recent weeks. There is no clear answer as to when foreign investors will stop selling.
In the derivative market, the Nifty Gift closed at 22,131.50 on Monday, reaching a low of 22,090 this morning. This suggests that the Indian market will start the day with considerable losses.
On Monday, European markets closed with notable gains, particularly stocks of companies involved in manufacturing arms and military equipment. European countries have decided to increase military spending, which has led to significant gains in defence stocks, with most companies rising by over 10%.
Trump reiterated that there would be no reconsideration of his tariff imposition, which further hammered US markets. He signed an order to impose a 10% tariff on China, in addition to the previously imposed tariff. Additionally, a 25% tariff on imports from Mexico and Canada will take effect today. Trump also confirmed that there would be no change to his decision to implement counter tariffs in April, mirroring the tariffs imposed by other countries on US products.
Experts and markets believe that the tariffs will increase inflation in the US, lower economic growth, and reduce corporate profitability. Higher inflation could also lead to interest rate hikes.
US Market Dips Following Tariff Announcement
The US market initially started the day with gains. The Dow Jones was up by 200 points before dropping by 800 points after Trump's announcement. On Monday, the Dow Jones Industrial Average fell by 649.67 points (1.48%) to close at 43,191.20. The S&P 500 index dropped by 104.78 points (1.76%) to close at 5,849.72, and the Nasdaq Composite lost 497.09 points (2.64%), ending at 18,350.20.
US futures opened with some gains but then began to decline. The Dow Jones was down by 0.05%, the S&P 500 was down by 0.04%, and the Nasdaq was up by just 0.6%.
Asian markets began the day in a sharp decline. Japan's Nikkei dropped by over 2%, while Australia's and South Korea's indices fell by more than 1%. Hong Kong and Chinese indices also saw losses.
On Monday, the Indian market experienced considerable volatility. After an early rally, the market sharply dipped before recovering slightly in the afternoon, closing with minor losses. The banking, financial, media, and oil-gas sectors all ended in the red, while the real estate, metals, IT, consumer durables, healthcare, pharma, FMCG, and auto sectors showed positive movement.
The Nifty 50 closed 5.40 points (0.02%) lower at 22,119.30. The Sensex ended down by 112.16 points (0.15%) at 73,085.94. The Bank Nifty lost 230.40 points (0.48%), ending at 48,114.30. The mid-cap index rose by 0.15%, closing at 47,984.15, while the small-cap index fell by 0.27%, closing at 14,660.85.
Foreign institutional investors (FIIs) sold a net ₹4,78,829 crore in cash markets, while domestic funds and financial institutions purchased a net ₹8,790.70 crore. The market breadth remained negative, with 1,173 stocks advancing and 2,919 stocks declining on the BSE. On the NSE, 880 stocks gained, while 2,071 stocks fell.
The market sentiment remains bearish, and the hope for a pullback rally after a 16% drop seems almost faded. Today, the Nifty is expected to find support at 22,025 and 21,970, while resistance is seen at 22,230 and 22,380.
Gold has been on the rise again. As Trump escalates the trade war, more investors have turned to gold as a safe haven. Central banks are also increasing their gold reserves. The dollar index dropped by around 1.5%, which helped push gold prices higher, with the price of gold nearing $2,900 per ounce. The international price closed at $2,894 per ounce on Monday, before falling to $2,888 this morning.
In Kerala, the price of gold jewellery remained unchanged at ₹63,520 per gram, but it is expected to rise significantly today. Silver prices also surged, reaching $31.67 per ounce.
Crude oil prices have fallen again. OPEC reiterated its decision to maintain production levels in April, which is one of the main reasons for the drop in oil prices. The ongoing trade war has raised concerns about global economic growth, further dragging oil prices down. On Monday, Brent crude closed at $71.49 per barrel, before dropping to $71.12 today. WTI crude fell to $68.06, and UAE's Murban crude rose slightly to $71.51.
Cryptocurrencies, which had surged following Trump's announcement of potential regulation, experienced sharp declines. Experts have pointed out that the market fundamentals for cryptocurrencies remain weak and the broader economic issues affecting traditional markets are also negatively impacting crypto assets. Bitcoin fell by over 12% to near $82,500, while Ethereum dropped by 19%, dipping below $2,050.
Industrial metals, excluding lead, showed positive movement on Monday. Copper rose by 0.60%, closing at $9,394.28 per tonne. Aluminium increased by 0.50%, closing at $2,615.82, while tin, nickel, and zinc saw modest increases. Lead, however, fell by 0.46%.
Sensex: 73,085.94, -0.15%
Nifty 50: 22,119.30, -0.02%
Bank Nifty: 48,114.30, -0.48%
Mid-Cap 100: 47,984.15, +0.15%
Small-Cap 100: 14,660.85, -0.27%
Dow Jones: 43,191.20, -1.48%
S&P 500: 5,849.72, -1.76%
Nasdaq: 18,350.20, -2.64%
Dollar ($): ₹87.37, -₹0.13
Dollar Index: 106.75, -0.86
Gold (per ounce): $2,894.00, +$35.90
Gold (per gram): ₹63,520
Crude (Brent): $71.56, -$1.60
