SENSEX falls over 350 points, NIFTY below 22,450: Key factors behind market fall

The Indian equity benchmarks resumed their downward spiral on Wednesday, April 9, after a day's pause in the previous session.

The SENSEX fell as much as 554 points, and the NIFTY50 index touched an intraday low of 22,353.25 before recouping some losses in afternoon trading.

As of 1:02 pm, the SENSEX was down 363 points at 73,865, and the NIFTY50 index slipped 122 points to 22,414, dragged down by weakness in index heavyweights such as Infosys, HDFC Bank, Larsen & Toubro, State Bank of India, Axis Bank and Bajaj Finance.

Reserve Bank of India's lowering growth forecast

The Reserve Bank of India (RBI) on Wednesday lowered its economic growth forecast for the current financial year to 6.5% from its earlier projection of 6.7%. The 20-basis-point reduction in projection for gross domestic product (GDP) by the RBI came on the back of rising concerns over a trade war that could negatively impact India's exports.

For the first quarter of the current financial year, the RBI has pegged the GDP growth forecast at 6.5%; second quarter growth has been projected at 6.7%; third quarter growth has been pegged at 6.6% and fourth quarter at 6.3%.

“The recent trade tariff-related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation. Financial markets have responded through a sharp fall in the dollar index and equity sell-offs with significant softening in bond yields and crude oil prices,” RBI Governor Sanjay Malhotra said in a statement.

Trump tariff tantrums

The growing uncertainty over trade wars escalated further after Trump tariffs took effect from Wednesday midnight, leading to a slump in most of the Asian markets.

US President Donald Trump imposed an additional 50% tariff on Chinese goods, taking the total quantum of the tariff to 104%, after China refused to roll back a 34% tariff on American imports.

Stocks across Asia came under selling pressure, with Japan's Nikkei falling 3.78%, Australia's S&P/ASX 200 index dropping 1.80%, South Korea's KOSPI declining 1.74% and NIFTY50 declining 0.5%.

European shares were also trading lower as Germany's DAX dropped 1.76%, England's FTSE100 index fell 2% and France's CAC40 index plunged 1.96%.

US stock futures were also indicating another session of losses in the US as Dow futures fell 2.96%.

Overnight, Wall Street fell for a fourth straight session on Tuesday, with the S&P 500 closing below 5,000 for the first time in almost a year. The index has crashed 19% from its recent high on February 19.

Back home, selling pressure was broad-based, as most of the major sector gauges compiled by the National Stock Exchange were trading lower, led by the NIFTY IT index's nearly 2% fall. Pharma shares also came under selling pressure, with the NIFTY Pharma index declining 1.5% after reports suggested that the US will impose tariffs on pharma imports as well.

NIFTY Bank, PSU Bank, Financial Services, Metal and Realty indices also dropped over 1% each.

Mid- and small-cap shares were also facing selling pressure as the NIFTY Midcap 100 index fell 0.46% and the NIFTY Smallcap 100 index declined 0.85%.

On the flipside, some buying interest was visible in auto and FMCG shares.

Wipro was the top loser in the NIFTY50 basket of shares; the stock fell 3.85%. Trent, State Bank of India, Larsen & Toubro, Tech Mahindra, Infosys and Tata Steel also dropped between 2 and 3%.

On the other hand, Nestlé, Hindustan Unilever, Hero MotoCorp, Titan, Power Grid and Tata Consumer Products were among the top gainers in the NIFTY50 index.