Indian equity markets collapsed in the afternoon session witnessing a sudden sell-off after China imposed fresh tariffs on the imports worth $50 billion from the United States following a counterattack on Trump’s tariffs which were announced yesterday.
Indian equity markets collapsed in the afternoon session witnessing a sudden sell-off after China imposed fresh tariffs on the imports worth $50 billion from the United States following a counterattack on Trump’s tariffs which were announced yesterday. China’s move to impose additional tariffs on the imports of products ranging from aircraft, cars to frozen beef, whiskey triggered an abrupt sell-off in the equities worldwide from Europe to Asia. Indian stock markets faced a heavy jolt in the intraday dealings with Sensex slipping as much as 398.07 points to a day’s bottom of 32,972.56 whereas Nifty tripped below 10,150 to 10,111.3, down by 133.7 points on Wednesday.
“Investors are wondering whether one of the worst trade disputes in many years could now turn into a full-scale trade war between the world’s two economic superpowers, Reuters said in a report.
“Beijing and Washington detailed plans to hike tariffs on a broad swath of imported goods from each other, in a series of rapid-fire announcements over less than 24 hours that ratcheted up tensions over their trade dispute,” Associated Press said in a report.
China’s Retaliatory Tariffs
- China has decided to impose additional tariffs on as much as 106 US goods to the tune of 25% which include products such as soybeans, some types of aircraft, corn products, whiskey, cigars, tobacco, frozen beef, lubricants, US orange juice, cotton, trucks, some SUVs, and certain electric vehicles.
- The introduction of additional tariffs on the products imported from the United States came in a response to the Trump’s administration which brought about 1,300 Chinese products under the tax net.
- “Disregarding strong representations by China, the US announced the tariff proposals that are completely unfounded, a typical unilateralist and protectionist practice that China strongly condemns and firmly opposes,” China’s Ministry of Commerce (MOC) said today.
- The Chinese Commerce Ministry has said that the date with which the tariff hike will take place is subject to the move United States when it raises duties.
Indian Equity Market Reaction on Wednesday
- As many as 42 shares among the 50 components of Nifty index ended in red plummeting up to 4% with Titan Company (down 3.17%), Hindalco (down 3.44%), Tata Steel (down 3.55%), Vedanta (down 3.99%) and UPL (down 4.13%) losing the most.
- The volatility in the Indian markets shot up invariably in the late trades as India Vix, the volatility indicator on NSE, soared 8.56% to 16.4850 before closing 7.6% higher at 16.34.
- All the sectoral indices barring Nifty Auto index ended in red, thanks to the heavyweight shares of Tata Motors which surged 3.41% to close at Rs 354.8 on NSE.
- Out of the eleven sectoral indicators, Nifty Metal (down 2.57%), Nifty Media (down 1.7%), Nifty PSU Bank (down 1.69%), Nifty Bank (down 1.55%), Nifty Private Bank (down 1.52%), Nifty Financial Services (down 1.38%) and Nifty Realty (down 1.31%) were the top laggards.
- Shares of heavyweight shares of companies such as HDFC Bank, HDFC, L&T, Infosys, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Tata Steel, Yes Bank, State Bank of India, Reliance Industries and M&M contributed heavily in the Sensex decline on Wednesday. Collectively these 12 stocks wiped off as much as 323 points from the index.
- Among the ‘A’ group shares of BSE, stocks of Adani Enterprises, Network18 Media & Investments, HCC, Vakrangee, Jaiprakash Associates shed 4 to 7% while stocks of Reliance Power, Kwality, Reliance Naval and Engineering surged 5 to 11%.
- The S&P BSE Sensex crashed 351.56 points or 1.05% to end the day at 33,019.07 whereas NSE Nifty dived 116.6 points or 1.14% to conclude at 10,128.4 on Wednesday.
Regional Asian Markets
- A downtrodden effect was seen in the other Asian equity markets after the China’s move to impose additional tariffs with South Korea’s Kospi dropping 1.4% to 2,408.06 China’s Shanghai Composite index shedding 0.2% to 3,131.11 while Hong Kong’s Hang Seng plunging 2.2% to 29,518.69.
- While, on the other hand, Japan’s Nikkei 225 gained 0.1% to end at 21,319.55 as Japanese stock markets closed before the announcement.