Sensex drops 2% as trade war concerns erase Rs 11.30 lakh cr of investors' wealth

New Delhi: Investors' wealth eroded by Rs 11.30 lakh crore since early this month, where the BSE benchmark Sensex tumbled nearly 2 per cent, as stock markets experienced turbulence in recent times initially due to US President Donald Trump unveiling a massive tariff plan, followed by growing concerns of a tit-for-tat trade war between China and the US. Since April 2, the BSE benchmark gauge has slumped 1,460.18 points or 1.90 per cent. Tracking uncertainty in equities, the market capitalisation of BSE-listed firms tumbled by Rs 11,30,627.09 crore to Rs 4,01,67,468.51 crore (USD 4.66 trillion) during this period.

Benchmark indices jumped nearly 2 per cent on Friday as investors rejoiced at the 90-day suspension of additional import duties by the US. Markets remained closed on two occasions, on April 10 for Shri Mahavir Jayanti and April 14 due to Dr Baba Saheb Ambedkar Jayanti. Trump unveiled a massive tariff plan in the first week of April. The White House later announced a 90-day pause on "reciprocal tariffs" for most countries except China, which in turn decided to impose 125 per cent tariffs on US imports. China on Friday upped its additional tariff on US goods to 125 per cent, retaliating the America's 145 per cent levy. "Markets had a rocky start to the new fiscal year after Trump announced sweeping reciprocal tariffs on the world. Global markets witnessed sharp losses, and India also was not immune to the sell-off but fared relatively better so far," Satish Chandra Aluri, Analyst at Lemonn Markets Desk, said.

The US, on April 2, announced an additional 26 per cent tariff on Indian goods entering the US. But on April 9, the Trump administration announced the suspension of these on India for 90 days until July 9 this year. However, the 10 per cent baseline tariff imposed on the countries will continue to remain in place. "Immediate challenge emanates from the global trade war with escalating tit-for-tat tariffs between the US and China. How the trade war evolves will be the key factor in determining the growth trajectory and market outlook for FY26," Aluri added. Market participants fear that tensions between the world's two largest economies could cause widespread global damage. China is the only country to have retaliated with tit-for-tat levies. Vishnu Kant Upadhyay, AVP - Research & Advisory at Master Capital Services, said that the Indian markets have indeed experienced turbulence in recent times, driven by a combination of domestic and global factors. But, now global uncertainty is the major fear of market participants which can be a big force in deciding the trend and trajectory in the near term. According to him, Indian equity markets are navigating a complex landscape which is shaped by global uncertainties and potential shifts in US trade policy. While domestic resilience and strengthening corporate earnings could offer a base for recovery. "Despite the steep correction that took off during the end of the previous year, participants are optimistic that the market could rebound in the second half of FY26. This projected rebound is likely to be aided by a recovery in corporate profits and renewed foreign capital inflow since valuation has turned reasonable. "But the present phase of uncertainty may last for another three to six months specifically because of fear of a US slowdown and recession that is stifling investor sentiment. Conversely, if global conditions stabilise, Indian equities may once again emerge as a desirable destination for foreign investors seeking long-term growth potential," Upadhyay said. He further added that India's economy is well-placed to grow but global market uncertainties, volatility and trade disruptions are still major risks. "Sustained policy support and domestic resilience will be essential in maintaining economic momentum especially to protect and support Indian industries and economy from the US tariffs and potential trade wars," Upadhyay added.