Equity Market shaken as Trump’s tariff war escalates
Shrikant Chouhan,
Head Equity Research,
Kotak Securities
Mumbai, April 7, 2025: Today, against the backdrop of weak global sentiment, our market corrected sharply. The Nifty fell by over 3 percent, while the Sensex was down by 2200 points. Among sectors, all major sectoral indices traded in the red, with the Metal and Realty indices losing the most Metal down 6 percent and Realty down 5 percent. Technically, the market opened with a significant gap down but, following the gap down, witnessed intraday recovery from lower levels. However, the short-term texture of the market is still on the weak side. We believe that the current market environment is extremely volatile and uncertain; hence, traders may prefer to adopt a cautious stance in the near future.
In the short term, 22000/72400 would be the key level to watch. If the market manages to trade above this level, the pullback formation could continue up to 22500-22600/73800-74200. On the flip side, a dismissal of 22000/72400 may lead to further weakness. Below this level, the market could retest the 21800/71800 mark, and additional weakness may continue, potentially dragging the index down to 21650/71400.
Satish Chandra Aluri, Lemonn Markets Desk, adds: "Benchmark indices plunged on Monday as global markets across the world crashed on escalating trade war. Global markets are witnessing a deepening rout with selloff across the regions and asset classes. Broader Mid and Small caps also posted sharp losses for the day.
Markets opened at steep losses with Nifty 50 opening below 22k after Asian indices from Japan to Korea to China had witnessed record losses and US futures indicated another session of steep drawdown. Markets took the weekend defence of tariffs from Trump administration as indication that US might not soften its stance in response to China retaliation and overall, the global growth and inflation outlook has suddenly changed dramatically with escalating trade war. Recession was not a base case until the last week, but it is quickly becoming the base case for markets, as they quickly price in the recession risks with global economic/trade order expected to undergo dramatic shift.
Markets now await the RBI meeting for a widely expected 25bps rate cut to support domestic growth, while monitoring any easing of U.S. trade tariffs amid rising recession risks. The upcoming Q4 earnings season will also play a key role in shaping market direction.
Benchmarks rebounded in last hour of trade from short term oversold levels, with Nifty 50 reclaiming 22000 level. On the downside, expect 21800 to act as strong support zone while 22200 acts as immediate resistance. For Bank Nifty, 49500 is immediate support zone, while 50000 acts as near-term resistance zone.
