Sensex, Nifty plummet to 6-month low as Trump rattles stock market: 6 key factors

Indian equity markets suffered a massive jolt on Friday with the benchmark indices Sensex and Nifty plummeting to their respective six-month lows on US President Donald Trump’s imposing tariffs on Chinese imports. In a crucial move on Thursday, just a day after the US Federal Reserve hiked the interest rates by 25 basis points under the new Chairman Jerome Powell, the POTUS (President of the United States) Donald Trump imposed tariffs on sanctions on goods and investment from China. All of the Asian stock markets hovering into negative territory following the concerns of the global trade war.

Here are 6 factors which may be noted as Sensex and Nifty dropped to six-month lows

  1. Donald Trump signed a memorandum that will target up to $60 billion of imports from China. This resulted in a heavy selling on Wall Street overnight with all three major gauges Dow Industrials, S&P 500 and Nasdaq losing more than 2% as feared on the extent of impact on global trade.
  2. US stock markets on Thursday crumbled to their worst in the last six weeks as President Donald Trump’s move to impose tariffs led a wave of pessimism among the investors. The Dow Jones Industrial Average fell 724.42 points or 2.93% to 23,957.89, the S&P 500 lost 68.24 points or 2.52% to 2,643.69 and the Nasdaq Composite dropped 178.61 points or 2.43% to 7,166.
  3. “The economic impact on both China and the US will be determined by what form the tariffs end up taking. The effects are likely to be felt more strongly in the US and will increase both consumer and producer prices,” Reuters reported citing Hannah Anderson, Global Market Strategist, JP Morgan Asset Management.
  4. Many big US companies have built complicated supply chains that stretch across the Pacific Ocean. A trade war could disrupt the back-and-forth flow of parts, forcing factories to slow or halt production, Associated Press said in a report.
  5. Following the jitters of Wall Street drop, Asian stock markets reacted on the same lines from Japanese Nikkei to South Korea’s Kospi index. A big shake-off was observed in the Asian peers as in the late morning deals, Japanese Nikkei dived 4.1%, China’s Shanghai Composite shed 3.3%, Hong Kong’s Hang Seng retreated 2.8% whereas South Korea’s KOSPI tumbled 2.3%.
  6. Following the global downturn and sell-off, Indian stock markets retreated very badly with shares of heavyweight companies such as ICICI Bank, HDFC Bank, HDFC, L&T, Reliance Industries, Axis Bank, State Bank of India, Kotak Mahindra Bank, Yes Bank and ITC.

The benchmark Sensex on Friday tumbled as much as 471.44 points to a 6-month low of 32,534.83. This was the lowest level of BSE Sensex index since 32,502.08 which was hit on 24 October 2017. The broader Nifty indicator slipped below the psychological mark of 10,000 falling as much as 153.45 points to over a six-month low of 9,961.3. This was the lowest since 9,955.8 which was hit on 11 October 2017.

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