Black Monday: Slowdown fears spook global markets

Bengaluru: It was Black Monday for global markets as fears of an economic slowdown in the United States due to President Donald Trump's tariffs, and the real possibility of further retaliatory tariff action by other nations, spooked investors worldwide.

Benchmark indices Sensex and Nifty logged their worst single-day decline in 10 months, and the rupee had its worst day in three months. Meanwhile, global equities got hammered, with the key MSCI Asia Pacific Index witnessing its biggest slump since the 2008 financial crisis.

The 30-share BSE Sensex tanked 2,226.79 points, or 2.95%, to settle at 73,137.90. During the day, it had dropped 5.22%. Investors on Sensex lost Rs 14.09 lakh crore on the day. The 50-share NSE Nifty tumbled 742.85 points, or 3.24%, to settle at 22,161.60. Intra-day, it had fallen 5.06%.

"The markets tumbled as the carnage over high US tariffs and the retaliation by other countries may kickstart a trade war. Sectors like IT and metals have underperformed relative to the broader market due to the risk of high inflation with slower growth that may result in a potential recession in the US," said Vinod Nair, Head of Research, Geojit Investments Ltd.

Nair said that though the overall impact on India may be limited compared with other countries, investors are advised to play cautiously during this fray. Focus will be on pure-play domestic themes, where the rebound is likely to be fair when the dust settles, he added.

"Adding to the bearish sentiment, India VIX spiked by approximately 66%, hitting multi-month highs and signaling the potential for heightened volatility ahead — typically a negative indicator for market direction," said Ajit Mishra, SVP Research, Religare Broking Ltd.

VIX's (volatility index or fear index) daily rise was the biggest in 10 years. The broader small-cap and mid-cap indices fell 3.9% and 3.6%, respectively, their worst session in nearly three months.

Meanwhile, the rupee logged its steepest one-day decline in nearly three months, since January 13. It closed at 85.8350 per US dollar, down 0.7% on the day.

Among global markets, MSCI Asia ex-Japan index lost 8.3%. Japan's Nikkei 225 dropped 7.8%, while European stocks plunged with Germany's Dax falling 5.3% and the British FTSE shedding 4.1%.

The American markets opened sharply lower on Monday with Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite Index all down between 3 and 4%.