It was a bloodbath across equity markets on Friday after US President Donald Trump announced sweeping tariffs on Chinese goods, a move that has heightened concerns that the global trade war will escalate.
The Bombay Stock Exchange's benchmark Sensex plunged 416 points or 1.3 per cent to 32,589.86 points and the wider NSE Nifty 50 index was trading 125 points or 1.2 per cent lower at 9,989.80 points.
Overnight, the US markets also crashed following the Trump's announcement; the Dow Jones Industrial Average ended 724 points or 2.9 per cent lower and the Nasdaq too fell 2.4 per cent.
Major Asian markets also crashed; Japan's Nikkei was down 3.5 per cent, Shanghai Composite index tumbled 3.3 per cent, Hong Kong 's Hang Seng slumped 2.7 per cent and Singapore's Straits Times and Korea Kospi indices also fell around 2 per cent.
The US President has for long talked of imposing tariffs on imported goods, a move he hopes will boost manufacturing and jobs at home. On Thursday, Trump signed a presidential memorandum that could impose tariffs on up to $60 billion of imports from China.
On Friday, China hit back, announcing plans to impose tariff on up to $3 billion worth US imports including pork, recycled aluminum, steel pipes, fruit and wine.
“China doesn’t hope to be in a trade war, but is not afraid of engaging in one,” the Chinese commerce ministry said in a statement.
In the domestic market, all the stocks in the 30-share Sensex were trading in the red. Banking stocks which have been under pressure for some time now, in the wake of recent frauds and bad loan concerns led the losers, with Yes Bank, ICICI Bank, State Bank and Axis Bank, all declining 2.50-3.50 per cent.
There was selling pressure in metal stocks too. While, Tata Steel was down 3 per cent, Hindalco, Nalco, Jindal Steel and Steel Authority of India fell 4-5 per cent. Trump had already imposed tariffs on imported steel and aluminium.
"Global economy is looking incredibly more brittle this morning as fears of a kick start of trade war looks real now. Indian markets are expected to see a continuation of the selling pressure with markets looking immensely fragile today," said Sageraj Bariya, vice-president East India Securities.
Christine Lagarde had earlier this month called for countries to refrain from a global trade war, urging policy makers to work constructively together reduce trade barriers and resolve trade disagreements.
"Economic history clearly shows that trade wars not only hurt global growth, but they are also unwinnable,” Lagarde had said.