Fears of a full-blown global trade war and a potential US recession sent the benchmark indices plunging on Monday, with both the Sensex and the Nifty posting a 3% drop — their biggest decline in 10 months.
Following a sharp selloff in other Asian markets, the Sensex opened over 3,900 points (5.2%) lower on the first trading day of the week. It managed to recover over 40% of the losses due to value buying and short covering, eventually closing at 73,137.90, down 2,226.79 points or 2.95%. The Nifty also began the day with a gap-down of over 1,100 points, slipping below the 22,000-mark before recovering to settle at 22,161.60, down 742.85 points or 3.24%.
Market volatility also surged, with the NSE’s India VIX index jumping a record 65.63% to close at 22.79 — its highest level since June 4, 2024, when it had ended at 26.75. This marks the largest single-day percentage rise in VIX since August 24, 2015 (64.36%).
Across Asia, major markets slumped — Hong Kong, Taiwan, Japan, Singapore and China were the top losers, falling between 7.3% and 13.2%. The MSCI Asia Pacific Index recorded its steepest decline since 2008, while Japan’s Nikkei 225 officially entered a bear market. European indices also traded lower, declining up to 4%.
US stock indexes, which have also taken a beating after Trump’s tariff move, fell in early trade on Monday. The S&P 500 fell 20% on an intra-day basis from its February record closing high, while the blue-chip Dow was down nearly 17% from its December all-time high.
Foreign portfolio investors (FPIs) continued their selling spree, offloading shares worth Rs 9,040.01 crore, while domestic institutional investors (DIIs) were net buyers, purchasing shares worth Rs 12,122.45 crore, according to provisional BSE data.
Amid the broad-based selling, investors’ wealth got eroded by Rs 14 lakh crore, bringing the total market capitalisation down to Rs 389.25 lakh crore. Intraday, the loss peaked at over Rs 20 lakh crore.
The market breadth was heavily negative, with 3,515 stocks declining against just 570 gainers on the BSE. Broader indices also suffered, as the BSE Midcap and Smallcap indices fell 8.16% and 10.58%, respectively, during intra-day trade. However, both indices recouped more than half of their losses, ending the day lower by 3.46% and 4.13%, respectively.
A total of 775 stocks on the BSE and 645 stocks on the NSE hit their 52-week lows on Monday.
“The market is unable to quantify the uncertainty unleashed by the tariff war. It is reacting to every piece of news. The unfolding events are likely to keep sellers in aggressive mode and buyers hesitant,” said Nilesh Shah, MD, Kotak AMC. “It would be futile to predict future events at this point,” he added.
“It is moments like these that remind investors just how difficult equity investing really is. Making money in the stock market is probably the most difficult game in the world,” said Shankar Sharma, founder, GQuant.
Despite the selloff, some experts remain optimistic about India’s resilience in the face of short-term global shocks. “While the market has witnessed sharp declines, wiping out 1-1.5 years of gains, such volatility is usually short-lived. India could remain insulated from global turmoil due to its strong domestic economy and active policy responses aimed at stability,” said A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.
Since the reciprocal tariff announcement by US President Donald Trump, Indian equity indices have declined around 5%, but have still outperformed several global peers — with indices in nearly seven countries falling between 10% and 14.5% — lending credence to Balasubramanian’s outlook.
Balasubramanian emphasised that India’s domestic fundamentals remain strong, with limited direct exposure to the ongoing tariff battles. Additionally, falling crude oil prices may help reduce inflation, potentially leading to rate cuts that support economic growth.
All sectoral indices on both the BSE and the NSE posted negative returns. The worst-hit sectors included metals, realty, commodities, industrials, and capital goods, falling up to 6.22%.
Among Nifty 50 constituents, only HUL (+0.24%) and Zomato (+0.22%) closed in the green. The biggest losers were Trent, JSW Steel, Tata Steel, Hindalco Industries, and Tata Motors, with losses of up to 14.7%.