Sensex and Nifty slip as U.S.-China trade tensions jolt global markets
The stock market across the globe opened sharply lower on Wednesday, April 9, 2025, as renewed trade tensions between the United States and China reignited fears of a prolonged tariff war. Indian equity benchmarks mirrored the global sentiment, reacting negatively to geopolitical risks and economic uncertainty. Both the Sensex and Nifty saw significant drops in early trade, while the Reserve Bank of India (RBI) announced a 25 basis point repo rate cut, aiming to protect growth amid international headwinds.
Market Overview: A Rough Start for Equities
At the opening bell, the Sensex dropped to 74,103.83, lower than the previous close of 74,227.08. As trading progressed, the index continued to face selling pressure, falling further to 74,039.01, marking a decline of 188.07 points or 0.25%.
The broader Nifty 50 also slipped, opening at 22,460.30 against the previous close of 22,535.85, and is currently trading at 22,440.65, down 95.20 points or 0.42%. Volatility remains high as market participants digest global cues and domestic monetary policy decisions.
Key Drivers Behind the Market Decline
1. Escalation of US-China Trade Tensions
The primary source of concern stems from escalating trade tensions between the United States and China. Washington announced a new set of tariffs targeting Chinese high-tech exports, including electric vehicle components and semiconductors. Beijing responded by threatening countermeasures on key U.S. goods such as agricultural imports and rare earth materials.
These developments triggered widespread risk aversion. Asian markets, including Japan’s Nikkei and Hong Kong’s Hang Seng, opened in the red, while European and U.S. stock futures also pointed toward a bearish start. Investors fear that a full-scale trade war could weaken global growth and disrupt fragile supply chains.
2. Global Sell-Off in Equities
Global stock markets have responded sharply to the tariff announcements. The Dow Jones Industrial Average futures fell by over 300 points in pre-market trade. The tech-heavy Nasdaq and the S&P 500 also indicated weak openings. Asian markets led the decline, with the Hang Seng down nearly 1.2% and the Shanghai Composite sliding by 0.9% in early trading.
Indian indices followed the global lead, with widespread selling across sectors. Auto, IT, metal, and capital goods stocks bore the brunt of the sell-off, while defensive sectors like pharma and FMCG showed relative resilience.
Monetary Policy Response: RBI Cuts Repo Rate by 25 bps
In a significant move, the Reserve Bank of India’s six-member Monetary Policy Committee (MPC) voted unanimously to cut the policy repo rate by 25 basis points, reducing it from 6.25% to 6%.
The central bank’s decision aimed to cushion the economy from potential fallout caused by ongoing global disruptions. The MPC highlighted the need to maintain financial stability and support domestic consumption and investment, particularly as external trade faces volatility.
The decision comes after the latest retail inflation reading fell below the RBI’s 4% target. With inflation easing and economic activity facing fresh risks, the rate cut was widely anticipated.
Governor Sanjay Malhotra noted in his policy statement that there is growing confidence about retail inflation aligning with the 4% target over the medium term. He stressed the need for timely monetary easing to avoid negative shocks to growth.
Sector-Wise Performance
Banking and Financials
Banking stocks showed mixed performance following the repo rate cut. PSU banks posted mild gains on expectations of improved credit demand, while private banks remained under pressure due to global sentiment.
State Bank of India (SBI) edged up slightly.
HDFC Bank and ICICI Bank traded lower despite the rate cut, reflecting broader risk aversion.
Information Technology
The IT sector declined, dragged by weak cues from U.S. tech stocks. Global tech sell-offs affected Indian IT majors like TCS, Infosys, and Wipro, which dropped between 0.5% and 1.2%. The strengthening of the Indian rupee against the dollar also weighed on export-focused firms.
Auto and Consumer Durables
Auto stocks remained under pressure amid concerns over increased import costs due to global trade disruptions. Market participants expect supply-side constraints and cost inflation to affect margins in the upcoming quarters.
Tata Motors, Maruti Suzuki, and Mahindra & Mahindra saw losses ranging from 0.8% to 1.5%.
Metals and Capital Goods
Metal stocks also fell sharply on fears that a prolonged tariff war could suppress global commodity demand. Companies like JSW Steel, Tata Steel, and Hindalco recorded declines of over 1%.
Broader Market Indicators
India VIX, the volatility index, rose by over 5%, signaling heightened nervousness among traders.
BSE Midcap and Smallcap indices also traded lower by 0.4% and 0.6% respectively.
Foreign Institutional Investors (FIIs) continued to remain net sellers amid the global rout.
Domestic Institutional Investors (DIIs), however, stepped in with selective buying in defensive stocks and high-quality large-caps.
Currency and Commodities
The Indian Rupee appreciated marginally to ₹82.41 against the U.S. dollar.
Gold prices rose to ₹66,800 per 10 grams in the domestic market as investors shifted to safe-haven assets.
Brent crude remained steady at around $88 per barrel, with market participants watching geopolitical developments closely.
Expert Commentary
Market experts believe that while the rate cut supports growth, it may take time for the effects to filter into equity markets. With global sentiment rattled, near-term volatility is likely to continue. Analysts recommend focusing on fundamentally strong companies with robust balance sheets and diversified revenue streams.
Some strategists expect value buying at lower levels, especially in banking and consumer-focused sectors, once global tensions ease. Others advise caution and suggest maintaining liquidity amid a potentially extended correction.
Outlook: What Lies Ahead
The outlook for the rest of the trading week remains cautious. Markets will closely track developments in the U.S.-China trade standoff and monitor comments from global central banks. Investors are also watching for earnings season updates, which begin next week and could offer fresh cues.
Domestically, the RBI’s proactive rate cut signals its commitment to supporting economic momentum. However, until global uncertainties subside, markets may remain range-bound with increased intraday volatility.
April 9, 2025, began with a cautious tone across global and Indian stock markets. Heightened trade tensions between major economies triggered a flight to safety, resulting in a sell-off across key indices. Despite the RBI’s supportive monetary policy move through a 25-bps repo rate cut, investor sentiment remains fragile in the face of external shocks.
Equity markets will likely continue to navigate through uncertainty in the coming sessions. Traders and investors will need to keep a close eye on global geopolitical developments, currency movements, and corporate earnings guidance to gauge future direction.
