After the chaos in the U.S., a significant decline in the stock market has also been observed in India. Reliance Industries (RIL) shares have dropped more than 4%. The major reason for the fall in Reliance’s shares is considered to be the global impact, where the fear of a recession is growing.
The U.S. stock market has experienced chaos. On Thursday night, the Nasdaq dropped nearly 6%, while the Dow Jones index fell by 1,600 points, or about 4%. The S&P 500 also saw a decline of around 5%. Before this, such a significant drop was last seen on March 16, 2020.
After the chaos in the U.S., a large decline was also seen in the Indian markets. However, Reliance Industries’ shares have fallen by more than 4%. The major reason for the fall in Reliance’s shares is believed to be the global impact, where the threat of recession is increasing.
On April 4, Thursday, Indian stock markets witnessed massive selling. The Sensex closed down by 930 points, or 1.22%, at 75,364. The Nifty 50 also fell by 345 points, or 1.49%, closing at 22,904. Four major reasons are being cited for this decline.
What Are the Causes of Growing Recession Fears Beyond Tariffs?
- Fear of a Global Trade War: After Trump imposed new tariffs, China and Canada also threatened to retaliate. Investors are anxious. The U.S. has imposed a 26% import duty on Indian goods and 10% on goods from other countries. In response, Canada has imposed a 25% tariff on U.S. vehicles. This has increased the risk of a global trade war.
- Global Market Decline: In the U.S., the S&P 500 index dropped by 5% and Nasdaq by 5.5%, the biggest fall since 2020. Asian markets also saw declines. Japan’s Nikkei fell by 3%, and South Korea’s KOSPI dropped by 2%.
- Sectoral Pressure: Pharma stocks, IT shares, and auto stocks are under significant pressure. There is heavy selling in Reliance shares as well. The Nifty IT index fell by 2%, with Coforge and Persistent Systems being the biggest losers. Metal stocks also saw selling.
- Rising Inflation: The biggest risk of a recession in the U.S. is inflation. Many experts believe inflation will rise rapidly in the U.S. as goods from other countries will now be available at higher prices. This will increase inflation. Meanwhile, the dollar index is also falling, which is not a good sign for the U.S. economy.
Is the Recession Risk Growing?
After Trump’s tariffs, the fear of rising inflation in global markets has increased, which in turn is raising the risk of a recession. Senior economist at Deutsche Bank, Brett Ryan, told Reuters that Trump’s tariffs could reduce the U.S. growth rate by 1-1.5% this year, significantly increasing the recession risk. However, there is no such crisis in India at the moment, and positive signs are visible for India’s economy.
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