The first day of the new financial year was a tough one for the Indian stock market. The Sensex dropped 1,390 points to close at 76,024, while the Nifty fell 353 points to 23,165. This sharp decline left traders and investors wondering about the reasons behind this market turmoil. Here are the four main factors responsible for the crash:
1. Fear of Reciprocal Tariffs by the US
The biggest reason for the market’s bad mood was the announcement of reciprocal tariffs by President Trump starting from April 2nd. The White House confirmed that these tariffs would be immediately effective.
- The reciprocal tariffs mean the US would impose the same amount of tax on imported goods from countries that have taxed American products.
- This announcement caused panic in global markets, not just in India.
- The US had already imposed tariffs on Canada, Mexico, China, and other trade partners.
- There were concerns about extra duties on automobiles, steel, aluminum, copper, pharma, and semiconductors.
According to Geojit Services’ Chief Investment Strategist VK Vijayakumar, markets worldwide were waiting for clarity on which countries, companies, and sectors would be affected.
2. Risk of a US Recession
The second reason for the market drop was fears of a US recession.
- Goldman Sachs raised the possibility of a US recession from 20% to 35%.
- This made global and Indian markets nervous.
- A US recession could impact the world economy and global trade.
3. Profit Booking After a Market Rally
Another reason for the crash was profit booking.
- In the last eight days, the Sensex and Nifty gained 5.4%, making their 2025 returns positive.
- After this strong performance, many investors decided to book profits, leading to sell-offs in large-cap stocks.
- According to VK Vijayakumar, the Sensex and Nifty gave a 6.3% return in March 2025, which was better than most global markets.
- He mentioned that a profit-taking was expected after such a rally.
4. Rising Crude Oil Prices
The fourth reason was the rise in crude oil prices in the international market.
- Brent crude oil prices increased by 1.51% to $74.74 per barrel.
- Higher oil prices increase India’s import bill, as India is one of the largest buyers of crude oil.
- This leads to concerns about inflation and puts pressure on the economy.
Conclusion
These four major factors combined to create panic in the stock market on the first day of the new financial year. Uncertainty about US tariffs, fear of a US recession, profit booking, and rising oil prices led to a sharp decline in the market. Investors are now watching closely for more updates on global economic conditions and policy changes.
