As of 7th April, 2025, investor wealth worth over ₹16 lakh crores was wiped out from Indian stock markets in just a few hours. With the brutal meltdown, the Sensex witnessed a crash of over 3,900 points, while Nifty dipped below the 21,800 mark. Let’s understand how the crash manifested and what the future might look like.
What was the trigger for the Indian Stock Markets Crash?
The Indian stock market crash of 7th April 2025 is closely linked to the escalating tariff tensions between the United States and 60+ countries from across the globe, including India. Here’s a simple timeline of how the US Tariff War has conspired:
Early Signs of the US Tariffs Announcement (January - March 2025) - Under President Donald Trump, the US authorities made comments about several countries including China and India to be involved in unfair trade practices and hinted at tariff hikes under the pretext of protecting American businesses.
US Imposed Fresh Tariffs (2nd April 2025) - The US government officially imposed steep tariffs on imports from over 60 countries. These included a 26% tariff on Indian goods and a 34% tariff on Chinese goods. The move was intended to make imported goods more expensive, thereby encouraging domestic consumption in the US. However, this decision triggered concerns of a global trade war.
China Retaliated (5th April 2025) - In a direct response to the US tariffs, China retaliated by imposing a 34% tariff on all imports coming from the United States, effective 10th April 2025.
US Markets Crash (6th April 2025) - The announcement of China’s retaliation sent shockwaves through global markets. US stock indices experienced steep declines, with the Nasdaq officially entering a bear market — defined as a fall of more than 20% from recent highs.
Trump’s tariffs wipe out $2.4 tn from the US market; Here’s what happened!
Bloodbath for Sensex and Nifty (7th April 2025) - Consequently, the Sensex plunged by over 3,900 points, while the Nifty has dropped below the 21,800 mark. This also marked one of the sharpest single-day declines in Indian stock market history.
Why Wasn't India Spared from the Tariff War?
Although India isn’t the main player in this tariff standoff, the ripple effects has hit home.
A tariff is essentially a tax imposed on imported goods. When one country raises tariffs, the cost of those goods goes up, making them less attractive to consumers. This can reduce trade, hurt businesses, and eventually slow down economic growth.
When major economies like the US and China enter into a tit-for-tat tariff battle, it creates uncertainty in the global economy. Investors fear lower corporate profits, reduced exports, and potential recessions — all of which contribute to sharp declines in stock markets around the world, including India.
| Index/Indicator | Change | Impact |
| Sensex | -2.95% | Lost over 3,900 points in a single day — worst since March 2020 |
| Nifty 50 | -3.24% | Crashed below the 21,800 level, which has sparked panic selling |
| India VIX | +65.7% | A rising India VIX (Volatility Index) means markets could stay unstable in the near term. |
Why has the Indian Stock Market Reacted So Sharply?
Even though these tariffs were not primarily targeted at India, investors have panicked due to:
1. Fear of Global Recession - Top banks like Goldman Sachs and JPMorgan now peg the chances of a US recession at up to 45% in 2025. A slowing US economy means less demand for Indian exports — especially across the IT, pharma, and manufacturing sectors.
2. Portfolio Sell-Offs by Foreign Investors - Foreign Institutional Investors (FIIs) tend to pull out money from emerging markets like India during global uncertainty. That leads to pressure on Indian indices, rupee depreciation, and a dip in valuations.
Which Indian Sectors Were Hit the Hardest?
| Index | % Change |
| Nifty IT | -2.51% |
| Nifty Pharma | -2.75% |
| Nifty Auto | -3.78% |
| Nifty Commodities | -3.7% |
| Nifty Metal | -6.75% |
The April 7th crash was indiscriminate — no sector was spared. Some of India’s biggest and most stable companies witnessed sharp declines, reflecting the depth of investor panic.
Tata Steel led the downfall, plunging over 7% as fears of slowing global demand and rising trade costs hurt metal stocks. Close behind, Tata Motors dropped more than 5%, hit by concerns over global supply chains and export disruptions due to the tariff war. Even India's trusted tech giants weren't immune. Infosys, TCS, and HCL Tech — often considered defensive plays — suffered heavy losses as global recession fears clouded future earnings.
The sell-off wasn’t limited to just a few stocks — it was across the board. All 30 stocks in the Sensex ended in the red, showing just how widespread the damage was.
Read more about the sectors and stocks impacted by the tariff war here.
What Should Investors Do Now?
1. Don’t Panic Sell - Markets often overreact in the short term. While this fall was steep, similar corrections during past global events — like COVID-19 or the 2008 crisis — were eventually followed by strong recoveries.
2. Focus on Defensive Stocks - Consider companies in sectors like FMCG, utilities, or insurance, which are less affected by global trade volatility. That being said, do back all your investment decisions with research.
Key Events to track in the Near Future
After the dramatic sell-off on April 7, investors will be closely watching several key events that could determine the next move for Indian stock markets.
- RBI MPC Meet - The Reserve Bank of India’s Monetary Policy Committee (MPC) is scheduled to announce its policy decision on April 9. With the stock market crash and global uncertainty looming large, there is speculation that the RBI may consider a 25 basis point rate cut to support growth and boost market confidence. A rate cut could provide temporary relief to markets and encourage liquidity, but much will depend on the tone of the RBI’s outlook.
- Q4 Corporate Earnings Begin - The fourth-quarter earnings season kicks off this week, with TCS among the first major companies to report results. These earnings will offer insight into how India Inc. is coping with both global and domestic challenges — from inflation to slowing demand. Strong numbers may help lift sentiment, but disappointing results could further weigh down markets already under pressure.
- Tariff War Developments - The biggest wildcard remains the US-led tariff war. Any further escalation between the US and countries like China or India could increase global volatility. On the flip side, if diplomatic talks resume or if there’s a rollback of tariffs, we could see markets stabilize or even bounce back. Indian equities are currently highly sensitive to global cues — especially from the US — making tariff developments crucial in the short term.
Should You be Worried?
It’s natural to feel concerned during sharp market corrections, but there’s no need to panic. While the ongoing global tariff tensions—especially between the US and major economies like China and India—have certainly rattled investor confidence, it's important to look at the bigger picture.
India’s long-term fundamentals remain resilient:
- Stable macroeconomic indicators: India continues to maintain a manageable fiscal deficit, controlled inflation, and steady GDP growth projections.
- Strong corporate earnings: Despite global headwinds, many Indian companies have delivered consistent performance, supported by domestic demand and cost efficiencies.
- High retail investor participation: India's investor base has grown significantly, bringing more stability and long-term vision to the markets compared to previous global shocks.
Also read: Should you continue or stop your SIP during a market crash?
Rather than making impulsive decisions based on fear, this is a good moment to re-evaluate your investment strategy, ensure it aligns with your long-term goals, and stay informed.
Disclaimer: This blog is for general/educational information purposes and is no way to be considered as advice, or recommendation for investment or otherwise. Investment in securities market are subject to market risk, read all the documents carefully before investing. The securities quoted are exemplary and not to be considered as any kind of advice or recommendation. The past performance of the stocks are not necessarily indicative of future performance. INDmoney Private Limited 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500.
Source: Google Finance, MS, Goldman Sachs