Mumbai: The equity markets slumped sharply on Wednesday tracking deep losses in global stocks due to renewed concerns regarding an escalation in global trade war after China imposed additional duties on $50 billion worth of American goods.
The Nifty dropped 116.60 points or 1.14 per cent to end the day at 10,128.40 while the Sensex fell 351.56 points or 1.05 per cent to end the day at 33,019.07.
Responding to the US government’s plan to go ahead with its decision to impose higher tariffs on $50 billion of Chinese industrial and hi-tech products, China unveiled a list of 106 products imported from the US that would be subjected to additional tariffs of 25 per cent including soybean, automobiles, etc.
The tit for tat response from China sparked fears about a full-blown trade war between the world’s two biggest economic powers causing a severe risk aversion in markets.
“Just when markets were attempting to make a comeback from the bearish sentiment of February and March, the re-emergence of trade war has disturbed the momentum. Chinese tit-for-tat respon-se to US tariff hike with a reciprocal tariff has triggered concerns that we may be in a long drawn trade war. This will definitely be the single biggest trigger point at the moment for global markets. It’s quite crucial that trade tensions have to be diffused for markets to make sustained bullish recovery. From Indian stand point, upcoming results and political developments have also to be closely watched,” said Jagannadham Thunuguntla, senior V-P and head of research (wealth) at Centrum Broking.
The sentiment also remained cautious ahead of the conclusion of the first bi-monthly monetary policy meeting of the RBI’s monetary policy committee. While the MPC is expected to keep the policy rate unchanged, the markets are looking forward to its comments on inflation.
