Would the Stock Markets Crash after April 2nd?

Recovery mode off

Since the last few days, the charts had turned green and we saw the stock market had started recovering.
The positive indications were seen as the FIIs started coming back to the market.

All that changed today

Today one can see that NIFTY has fallen by 353 points, about 1.5% and Sensex has also fallen by about 1.5%, so there are many reasons behind this, let us look at them in some detail.

Uncle trump is not happy

It all boils down to Uncle Trump not being happy. but the first and the biggest reason that is coming out is a statement by Donald Trump. Donald Trump has said that he is very
angry and is completely upset with Putin.
This is quite a change in his stance he has taken a complete U-turn, a few days ago he was after Zelenski, now he is after Putin again and he said that if Putin does not agree to the Ukraine deal, then we will impose an additional 50% tariff on the countries which are importing oil from Russia.

The wrath falls on those trading with Russia

India imports oil from Russia. The European countries also import oil from Russia. In such scanario countries buying Russian oil would have to face upto 50% more tariff. Due to this either India will have to stop importing oil from Russia or its trade relations with America can deteriorate.
Donald Trump believes that if Russia and he are unable to make a deal and the bloodshed in Ukraine does not stop and if I feel that Russia is at fault for this, then I will impose a secondary tariff on oil and on all the oil that comes from Russia. He has said that if you buy oil from Russia, then you cannot do business in America and you know that India is buying oil from there.

Fear of reciprocal tariffs

The second biggest reason behind the market falling today is the reciprocal tariff. Donald Trump had said that from April 2, he would impose reciprocal tariffs on all countries. The tariffs would be in proportion to the tariffs imposed on American goods.
As per the information available till now, from tomorrow 2nd April, America is going to impose reciprocal tariffs on all countries and if this happens, then businesses like
pharma companies, jewellery companies etc. can see a significant impact on them, so now because there are very high chances of implementation of this decision and it also seems that India will have to reduce the tariffs at many places, due to which the uncertainty in the market has increased and this is also a big reason due to which we have seen a big downfall in the market today, apart from this no specific details have come out yet as to how those tariffs will be imposed, so until these details are not available We may see volatility in the market and today this was a big reason due to which we have seen a downfall in the market.

Decline of the IT sector

Another reason due to which the market has fallen today is the decline in the IT sector. India's IT sector is dependent on America. Most of the business in its IT sector comes from USA.
Therefore now when the talk of reciprocal tariff is going on, the situation is creating a lot of volatility in the market. Due to this, the performance of the IT sector stocks has deteriorated a bit and we have also seen its impact in Nifty and Sensex.

Final Thoughts

The markets never like uncertainty and currently the situation is quite fluid and the markets are in a state of flux waiting for the events to happen before it makes the next move.

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Posted Using INLEO