Stock Market Crash: On April 7, 2025, the Indian stock market saw one of its biggest crashes in recent times. The Sensex dropped by nearly 4,000 points while the Nifty fell below the 21,750 mark. This sudden fall created panic among investors and caused a huge loss in market value.
One of the main reasons for the crash was a global stock market selloff. This was sparked by new tariffs introduced by US President Donald Trump on more than 180 countries. These tariffs raised fears of a global trade war, leading to a sharp drop in markets worldwide, including Asia, Europe and the US. The Dow Jones, Nasdaq and S&P 500 in the US also witnessed major losses.
India’s volatility index, India VIX, went up by 52%, showing that investors were very nervous. Over 700 stocks on the Bombay Stock Exchange (BSE) touched their 52-week lows which added to the concern. The Midcap and Smallcap indices dropped by nearly 10% affecting smaller investors more deeply.
Analysts believe the effects of the US tariffs are still not completely reflected in the market. Many experts fear that these tariffs could lead to a slowdown in economic growth, both globally and in India. There is also worry about the possibility of a US recession, which could reduce investor confidence and foreign investment in Indian markets.
After the tariffs were imposed, China responded by increasing tariffs on American products. This back-and-forth has raised fears of a full-blown trade war. Experts like JP Morgan have increased the chances of a global recession to 60%. If the US economy slows down, it will affect countries like India that trade globally.
India may not face the direct impact of US tariffs, but it cannot escape the broader effects of a global slowdown. Goldman Sachs even reduced India’s expected growth rate from 6.3% to 6.1% due to this uncertainty.
Another reason for the market crash was the outflow of foreign funds. Foreign Portfolio Investors (FPIs), who had been buying Indian shares recently, started selling again in April. They sold stocks worth over ₹13,000 crore, which added pressure on the market.
Investors are also waiting for the Reserve Bank of India’s policy decision on April 9. Some expect the central bank to cut interest rates to support the economy. Meanwhile, major companies are about to release their Q4 results. These earnings reports will also impact market sentiment.
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