stock market crash: Since the announcement of tariff by US President Donald Trump, there has been anarchy in stock markets, commodity markets and foreign exchange markets. Yesterday Dow Jones closed down 1679.39 points. Which is the biggest decline after Kovid epidemic (16 March 2020). Nasdaq also fell 1050.44 points.
Sensex below 1035 points
The Sensex fell 1054.81 points to a low of 75240.55 amidst the possibility of global economic recession. Only eight shares involved in the Sensex saw an increase of 1.42 percent. While the other 22 declined by 8 percent. Tata Steel was trading 8.01 percent, Tata Motors 6.62 percent, L&T 4.80 percent, Adani Ports 4.46 percent and IndusInd Bank 4.28 percent declined.
The Nifty 50 also broke the level of 23000 today and reached a low of 22857.45. Which was trading at 22888.65 below 361.45 points.
Investors resentment in smallcap stocks
Small investors have suffered the most due to the demolition of the stock market. The smallcap index fell by more than 1789.05 points today. Smallcap stocks saw a decline of up to 20 percent today. Only 57 shares included in the BSE Smallcap index improved. While 918 remained closed in the red zone. The midcap index also declined by more than 1400 points.
Factor responsible for the decline in stock market
Fear of global trade war: China and Canada retaliated after Trump’s new tariff. This has increased the possibility of trade war globally. India has not yet given any clarification on this issue. Investors have now become cautious given the possibility of recession due to Trump’s tariff.
Regional Pressure: Pressure has been observed on pharma shares, IT shares and auto stocks. The energy index declined 3.94 percent, 3.39 percent in healthcap, 3.77 percent in IT, 2.95 percent in auto, 4.33 percent in capital goods, 6.43 percent in metal, 4.22 percent in oil and gas, 3.26 percent in electricity, realty index 4.15 percent. Trump’s tariffs affect all these areas.
Possibility of increasing inflation: Inflation may increase in America. Because the goods coming from other countries can now be expensive. This will increase inflation. The dollar index has also declined. Which is not a good sign for the American economy.
Why is the risk of recession increasing?
Inflation will increase in global markets after Trump’s tariff. This will also increase the risk of recession. Economist Brett Ryan, an economist of Deutche Bank, said Trump’s tariff will reduce US GDP by 1-1.5 percent this year. This will increase the risk of recession. No such crisis has been seen in India yet.
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