Sensex, Nifty erase early gains: Why are Indian markets crashing today?

Indian benchmark indices Sensex and Nifty erased early gains made on Wednesday to trade in the red at about 11:30 am.

Sensex, which had opened 168.49 points higher, was down 361 points to its day’s low while Nifty, which opened 38.45 points higher, was down 121 points.

Nifty had opened the week’s trading with a dip but had recorded a rise on Tuesday, which it gave up intraday on Wednesday. Sensex, on the other hand, has been recording a dip continously since Thursday, March 6.

Why are markets crashing today?

Tech stocks drag indices

Both indices saw a massive dip in tech stocks on Wednesday, with Infosys leading the trend with a 5.34% drop on Sensex and a 5.42% drop on Nifty. It was followed by other Indian IT heavyweights like Wipro, HCLTech and Tech Mahindra. TCS also made it to the list of index draggers.

Tariff wars picking speed

A global tariff war, started by US President Donald Trump primarily against Mexico, Canada and China, saw a new incident of escalation when Canada decided to impose a 25% surcharge on electricity imports into US states of New York, Michigan and Minnesota.

In response to the surcharge, Trump announced on Tuesday that he’s imposing 25-50% tariffs on steel and aluminium products from Canada, which would take effect on Wednesday. Shortly after Trump’s announcement, Canada announced it will withdraw the tariffs.

These decisions and counter-decisions point to growing volatility in global tariffs, which has increased market uncertainty which extends to Indian stocks too.

US economy’s worrying trends

Concerns over a potential federal government shutdown and tariff conflicts have further fueled fears of a US recession. Weak consumer sentiment, slowing spending, and trade risks continue to weigh on US growth. In the previous session, Wall Street extended its losses.

Ukraine announces intent to accept ceasefire

Ukraine on Tuesday agreed to a 30-day ceasefire proposal, signalling a potential short-term peace deal with Russia which may slightly improve global supply chains, even if for a short while. However, Russian President Vladimir Putin’s announcement last week that Russia would never “give in” raises concerns of how successful the ceasefire might be.