Today is another bad day in the history of the Indian stock market. On this day, the Bombay Stock Exchange (BSE) Sensex fell 2,227 points (2.95%) to close at 73,137.90, while the National Stock Exchange (NSE) Nifty 50 index fell 743 points (3.24%) to settle at 22,161.60. The crash, dubbed "Black Monday", was one of the worst one-day declines in the last decade. In this article, we explain the causes of the crash, its impact, and future predictions in Telugu.
Causes of the Crash
US Tariff War:
The main reason for the crash was the comprehensive tariffs announced by US President Donald Trump on April 2, 2025. Tariffs ranging from 10% to 50% were imposed on 180 countries, including a 26% tariff on India. In response, China imposed a 34% tariff on imports from the US on April 5. The trade war has created uncertainty in global markets and triggered panic among investors.
Global market turmoil:
The event was not limited to India. Markets in Asia, Europe, and the US were also badly hit. In Japan, the Nikkei 225 index fell 7.8%, hitting an 18-month low. In Hong Kong, the Hang Seng index fell 11%, while in the US, the S&P 500 index fell 5.97%. This global sell-off had a profound impact on Indian markets.
US recession fears:
Economists have warned that tariffs could push up inflation in the US and hamper economic growth. Goldman Sachs has raised the probability of a US recession in 2025 to 45%, from 35% earlier. JP Morgan has pegged the chance at 60%. These fears have driven investors towards safe haven assets such as government bonds.
Foreign Institutional Investors (FII) sell-off:
Amid global uncertainty, FIIs sold equities worth ₹9,041 crore from the Indian stock market. The sell-off pushed the rupee down to 85.74, adding further pressure to the market.
Sectoral losses:
Metal, IT, auto, realty, and oil & gas sectors were the top losers. The Nifty Metal index fell 6.75%, while the Nifty IT index fell over 7%. Companies like Tata Steel (9.61%), Tata Motors (10.8%), and HCL Technologies (7.03%) suffered huge losses.
Impact
Wealth loss:
About ₹19 lakh crore evaporated from the market capitalization of companies listed on the BSE in a single day. With this, Indian markets have lost a total of $1 trillion in value since September 2024.
Billionaire losses:
India's richest people like Mukesh Ambani ($3.6 billion), Gautam Adani ($3 billion), Savitri Jindal ($2.2 billion), and Shiv Nadar ($1.5 billion) also suffered huge losses in the crash.
Confidence decline:
The India VIX, an index that measures market volatility, rose 56% to 22.8, indicating heightened fear among investors.
Tips for investors
Market experts have given some tips for investors during this crisis:
Avoid panic selling:
Historically, markets have recovered strongly after the 2008 financial crisis and the 2020 Covid collapse. Experts advise that it is better to be patient even in the current crisis.
Focus on defensive stocks:
Sectors like FMCG, utilities, and insurance are less affected by global volatility. Investing in companies in these sectors can be a safe option.
Diversification:
Rather than investing in a single sector, spreading investments across different sectors and asset classes reduces risk.
Focus on RBI decisions:
The Reserve Bank of India (RBI) is scheduled to announce its monetary policy decision on April 9. There are expectations of a rate cut of 25 basis points, which is likely to provide some relief to the market.
Future Outlook
Market analysts believe that the slump is temporary and that India's economic priorities will protect it in the long run. Experts say that the direct impact of the tariffs will be limited, as India's exports account for only 2% of US GDP.
By the end of March 2025, some signs of recovery were visible in the banking and infrastructure sectors. The Sensex is expected to touch 78,500 by mid-2025 and 80,850 by the end of the year. However, analysts warn that this recovery will be uneven and will vary by sector.
Conclusion
The Indian stock market crash on April 7, 2025 was a result of the global trade war and economic uncertainty. The crisis has reminded investors of the importance of diversification and long-term strategies. India's strong economic fundamentals and the RBI's potential policy actions are likely to stabilize the market. Investors are advised to be patient and make informed decisions during this volatile time.