Why Is the Stock Market Down Today? Here Are the Key Reasons Behind the Bloodbath on the D street

Bears took firm control of Dalal Street on Monday, April 7, as a wave of global panic triggered one of the worst selloffs in recent years, sending benchmark indices into a free fall.
The BSE Sensex plummeted 3,379.19 points or 4.48% to close at 71,985.50, while the NSE Nifty tanked 1,146.05 points or 5% to settle at 21,758.40. 

The carnage resulted in a massive erosion of investor wealth, with the market capitalisation of all BSE-listed firms plunging by Rs 19.4 lakh crore, now down to Rs 383.95 lakh crore.

The selloff spared no corner of the market. Nifty Metal collapsed 8%, while Nifty IT shed over 7%. Sectors like Auto, Realty, and Oil & Gas tumbled more than 5% each. Broader markets witnessed even deeper pain, with small-cap and mid-cap indices falling 10% and 7.3%, respectively.

Here’s a deep dive into the key factors that sparked this dramatic meltdown:

1. Wall Street Turmoil Sends Shockwaves Globally
The storm in Indian markets followed a brutal session in the US, where indices continued their historic slide.

On Sunday evening, Dow Jones Industrial Average futures plunged 979 points or 2.5%, S&P 500 futures dropped 2.9%, and the Nasdaq-100 futures tumbled 3.9%. This came after a staggering week for Wall Street, with the Dow shedding 2,231 points on Friday, marking back-to-back 1,500+ point losses for the first time ever.

The S&P 500 posted its worst day since March 2020, falling 6%, while the Nasdaq Composite entered a bear market, crashing 22% from its peak.

As mentioned in the report by Reuters, US President Donald Trump addressed the downturn on Sunday, stating, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” Referring to the ongoing trade deficit, he added, “We have a trillion-dollar trade deficit with China... unless we solve that problem, I’m not going to make a deal.”

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2. Escalating Tariff Tensions and Global Recession Fears
Trump’s recent announcement of sweeping tariffs shocked investors and stoked fears of a full-blown global trade war. China responded with retaliatory tariffs of 34% on US goods.
Federal Reserve Chair Jerome Powell remarked that the tariffs were “larger than expected” and cautioned they could significantly impact inflation and economic growth, compounding uncertainty over the US outlook.

According to Reuters, JP Morgan has raised the probability of a US and global recession to 60%, up from 40%, citing the intensifying trade war and weakening macro indicators.
 

3. Global Selloff Engulfs Asia-Pacific Markets
Asian markets were not spared. On Monday, major indices across the region suffered steep losses:
Hang Seng Index plummeted 8.95%
China’s CSI 300 fell 5.41%
Nikkei 225 in Japan dropped 5.92%, triggering futures trading halts
South Korea’s Kospi sank 4.11%
Australia’s ASX 200 fell 3.78%, now down 11% from February highs

These synchronized selloffs reflect fears of a prolonged slowdown and the interconnected impact of US policies.

4. Commodity Crash Adds Fuel to Fire
Global commodities also joined the rout, dragged down by demand concerns and global recession risks:
Brent crude fell 6.5%
WTI crude plunged 7.4%
Gold lost 2.4%, and silver crashed 7.3%

5. Domestic Triggers: RBI MPC & Earnings Caution

While global cues dominated Monday's rout, domestic factors also added to the nervousness.

The Reserve Bank of India’s Monetary Policy Committee (MPC) is set to announce its decision on April 9, and there's speculation of a rate cut to cushion against the global impact. With Q4 earnings season kicking off, investor focus is shifting toward corporate commentary, especially from TCS , which will report its results on April 10.

More than the numbers, the Street is looking for guidance on how firms plan to navigate the volatile global landscape.