Black Monday rattles Dalal Street: Time to flee or stay put? Experts share trading strategy

Stock Market Crash: Indian stock markets witnessed a dramatic sell-off on Monday, April 7, echoing a global trend, triggered by fresh trade tensions between the United States and its key trading partners, sparking fears of a global economic fallout.

The Nifty50 crashed more than 1,100 points at open, while the BSE Sensex slumped over 5 per cent to 71,449.94. Sectoral indices bled across the board, with metals and IT stocks leading the plunge. As fear gripped Dalal Street, investors were left scrambling for answers amid one of the most brutal trading sessions in recent memory.

Global Trade War Escalates, Markets React Sharply

The trigger for this meltdown was the escalation of a global trade war. On April 2, US President Donald Trump imposed reciprocal tariffs on goods from 180 countries, including economic powerhouses like China and India. The move, aimed at protecting American industries, was met with immediate retaliation from affected nations.

China responded swiftly by slapping a matching 34 per cent tariff on American goods. This tit-for-tat escalation between the world’s two largest economies sent tremors across global financial markets. Analysts fear this could mark the beginning of a prolonged trade war, with the potential to drag down global economic growth. J.P. Morgan has already raised the probability of a global recession by the end of 2025 to 60 per cent, up from 40 per cent earlier.

The impact was felt instantly on Wall Street and Asian markets last week, and the spillover reached Indian shores with full force on Monday. All 50 Nifty constituents opened in the red, and investor wealth worth over ₹19 lakh crore was wiped out in a matter of hours.

Worst-Hit Sectors: Metal and IT Take the Brunt

Among the sectors that bore the maximum impact were metal and IT stocks. With fears of reduced global demand and export curbs, metal counters like Tata Steel, Hindalco, and JSW Steel saw double-digit declines. IT majors like Infosys, TCS, and Wipro also faced intense selling pressure amid concerns of delayed client spending and macroeconomic uncertainties in key markets like the US and Europe.

Auto, banking, and real estate sectors too weren’t spared, as the selloff extended beyond global concerns to broader fears of economic deceleration and capital outflows from emerging markets.

The impact was felt instantly on Wall Street and Asian markets last week, and the spillover reached Indian shores with full force on Monday. All 50 Nifty constituents opened in the red, and investor wealth worth over ₹19 lakh crore was wiped out in a matter of hours.

Worst-Hit Sectors: Metal and IT Take the Brunt

Among the sectors that bore the maximum impact were metal and IT stocks. With fears of reduced global demand and export curbs, metal counters like Tata Steel, Hindalco, and JSW Steel saw double-digit declines. IT majors like Infosys, TCS, and Wipro also faced intense selling pressure amid concerns of delayed client spending and macroeconomic uncertainties in key markets like the US and Europe.

Auto, banking, and real estate sectors too weren’t spared, as the selloff extended beyond global concerns to broader fears of economic deceleration and capital outflows from emerging markets.

What should investors do now?

Pranay Aggarwal, Director and CEO at Stoxkart, urged investors to avoid panic selling. “Today’s Black Monday has certainly shaken sentiment, but investors should not let fear drive decisions,” he said.

Aggarwal encouraged continued investment via SIPs and suggested that this may be a good opportunity to accumulate quality stocks at attractive valuations. He also stressed the importance of risk management for traders—setting stop-losses, sticking to position sizes, and avoiding overtrading. “Volatility brings opportunity, but only for those with a clear process. Remember—this too shall pass,” he added.

Manish Jain, Chief Strategy Officer and Director at Mirae Asset Capital Markets, also emphasises sticking to SIPs and avoiding lumpsum investments.

The current scenario is steeped in uncertainty, making traditional valuation models difficult to apply. “Am I comfortable with valuations at these levels? Yes. But would I make a lump sum investment right now? Absolutely not,” he said. Jain advised investors to stay put with SIPs while avoiding fresh lumpsum allocations until volatility stabilises.

Market May Test Lower Levels

Jain warned that the Nifty could see a 5–6 per cent correction purely due to price-to-earnings (PE) contraction, dragging the index down to around 22,000. However, if earnings also take a hit, deeper cuts could follow, possibly pushing the index below the 20,000 mark, he warned.

He also pointed out that in past crises, earnings have been cut by up to 30 percent. As per Bloomberg estimates, current earnings have already seen downward revisions of 7 percent for CY25 and 2 percent for CY26 since September 2024.

Vishnu Kant Upadhyay, AVP – Research & Advisory at Master Capital Services, expects volatility to persist in the near term. He believes that while long-term opportunities are emerging, investors should brace for more downside in the short run.

“Sectors like Finance, Oil & Gas, Consumption, and FMCG could offer relative stability. Technically, Nifty may retest the 21,500 zone. A breakdown below that could drag it further towards 21,000,” he said. On the flip side, a bounce back toward 22,800 may invite fresh short positions unless accompanied by strong fundamentals. Upadhyay also pointed out that the market’s next cue will likely come from the upcoming RBI policy meet, where a 25 basis point rate cut is widely anticipated.

Cautious Optimism Is the Way Forward

Overall, as markets reel under the pressure of escalating global trade tensions and fears of a worldwide slowdown, the path ahead for investors is fraught with challenges. However, the consensus among market experts is clear—panic is not a strategy.

Investors are advised to stay the course with SIPs, avoid knee-jerk reactions, and focus on long-term goals. Quality stocks are becoming more reasonably priced, offering opportunities for those who can stay disciplined amid uncertainty.

With earnings season around the corner and macroeconomic events like the RBI’s policy meet in sight, the coming weeks will be critical in shaping market direction. Until then, a strategy rooted in patience, process, and prudence will serve investors best.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.