From Wall Street to Dalal Street: What's fuelling the global market crash? Everything you need to know

synopsis

Share markets on Monday, April 7 witnessed one of their sharpest single-day crashes since June 2024. The Sensex nosedived nearly 4,000 points, while the Nifty 50 plunged below the 21,750 mark, triggering widespread panic across Dalal Street.

The massive sell-off wiped out nearly ₹16 lakh crore in market capitalisation within hours, shaking investor confidence. The India VIX — a key measure of market volatility — surged over 56%, reflecting heightened fear and uncertainty.

Analysts attribute the crash to growing recession concerns in the US and the ripple effects of the escalating global trade war triggered by reciprocal tariffs imposed by President Donald Trump.

Dalal Street witnessed a brutal sell-off on Monday, mirroring a global market meltdown triggered by renewed fears of a worldwide recession. The carnage was widespread, with investors dumping stocks, metals, tech shares, and even traditional safe havens like gold in a desperate flight to liquidity.

The trigger? A fresh escalation in the US-China trade war. US President Donald Trump has announced a steep 54% tariff on Chinese imports, prompting swift retaliation from Beijing, which imposed a 34% duty on American goods. The tit-for-tat move has alarmed investors globally, raising the spectre of a prolonged trade war that could stall global growth.

Indian equity markets bore the brunt of the sell-off. The Nifty IT index plunged nearly 7%, as tech stocks came under heavy selling pressure. Since Indian IT majors derive a significant share of their revenues from overseas clients, any disruption in global trade or slowdown in technology spending directly threatens their earnings.

Financial Express quoted Anand James, Chief Market Strategist at Geojit Financial Services, "The Nifty IT index has broken below a widening wedge pattern and formed a weekly Marubozu candle—its second-biggest weekly fall since March 2020." "Crucially, it has breached the 200-week moving average for the first time since March 2020," he added.

The Nifty Metal index also tanked over 7%, reflecting mounting concerns about a slowdown in global demand. All 15 constituents of the index closed deep in the red. Lloyds Metals fell nearly 12%, Tata Steel lost 10%, and Hindustan Copper declined 9%, while Vedanta, SAIL, and Hindustan Zinc dropped around 8% each.

Even gold wasn’t spared. While usually considered a safe haven, gold prices fell as margin calls across falling equity markets forced investors to sell holdings to raise cash.

“This is the highest level of margin calls hedge funds have faced since the COVID crash of March 2020,” market expert Ajay Bagga told Financial Express. “We’re seeing even gold and silver being sold across the board to generate liquidity.”

The pressure is evident across asset classes—crude oil, metals, currencies, and equities—all sliding in tandem as markets digest the prospect of a drawn-out economic slowdown.

All eyes are now on the Reserve Bank of India’s policy meeting scheduled for April 9. While inflation has shown signs of cooling, the volatility in global markets and a weakening rupee may influence the central bank’s course of action.

A 25 basis point rate cut is widely expected, but greater attention will be on the RBI’s stance regarding liquidity and currency stability in the wake of heightened global uncertainty.