Stock Markets Crash On Recession Fear: Bear Party In US Stocks, Far From Over; Good Or Bad For Sensex, Nifty?

Indian stock market traded on a bearish trend during Tuesday's session, tracking the sharp downfall of Wall Street overnight where S&P 500 and Nasdaq shed about 3% and 4% broadly. US market, which witnessed buying trend from January to February, recorded significant correction in March so far. The problem? It is the concern of global trade war that could escalate because of Trump's stubborn plans to impose stringent and hefty tariff on foreign countries. China has already retaliated with its tariff to counterattack Trump.

But the latest bears were fueled by fears of economic slowdown after President Donald Trump did not rule out recession risks due to his tariff implementation. That was enough to topple S&P 500 and Nasdaq Composite index to their lowest level since September last year.

That being said, the US market crash is far from more as long as Trump's tariff tantrum continues. If that could be the case, how will US market crashes impact Sensex and Nifty?

US Market Crashed:

Overnight, Dow Jones Industrial Average shed 890.01 points or 2.08% to end at 41,911.71. While S&P 500 index nosedived by 155.64 points or 2.70%, which is its lowest performance in six months. Further, Nasdaq Composite index also hit 6-month low to close at 17,468.32, down by 727.90 points or 4%.

On Tuesday, US stock futures tumbled steeply as growing recession concerns forced a sharp selloff at the start of this week's session.

As per Trading Economics, on Sunday, President Donald Trump described the economy as being in "a period of transition" when asked about the risk of a recession. His tariffs have also heightened concerns that inflation could rise, potentially complicating the Federal Reserve's ability to cut interest rates. Investors are now closely watching the latest US inflation data this week for further insights into price trends.

What Is Ahead For the US Market?

As per Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, President Trump's flip-flop tariff policy and the high uncertainty that it has triggered has started impacting US stock markets: S&P 500 & Nasdaq declining by 2.6% and 4% respectively yesterday is the market's response to Trump's tariffs and the possibility of US recession by the year-end.

He added, "We will have to wait and watch how the situation develops."

Good Or Bad For Indian Stock Market?

So far, during the March 11th trading session, Sensex plunged by 451.57 points to hit an intraday low of 73,663.60. While Nifty 50 slipped by 145.6 points to hit an intraday low of 22,314.70. Also, Bank Nifty shed over 425 points and traded below 47,800 mark. IT, auto, banking, and media stocks are top bears of March 11.

Not just Indian stocks, the US market crash had soured mood in broader Asian stocks. Japan's Nikkei and Taiwan stocks nosedived by 3% each, recording their lowest level since September 2024. Also, MSCI's broadest index of Asia-Pacific shares outside Japan, was down by over 1%.

Vijayakumar said, "A significant consequence of the ongoing market correction is that India is now outperforming the US. During the last one month, while S&P 500 is down 7.5% Nifty is down only 2.7%. More importantly, the dollar index is down from 109.3 when Trump assumed presidency to 103.71 now. If this trend continues it will be good for emerging markets like India. Capital outflows from India will decline."

Lastly, Vijayakumar added, "The ideal investment strategy now is not to panic in the market correction and continue with the policy of slow accumulation of high quality stocks mainly in large caps and very selectively in beaten down mid and smallcaps."

Year-to-date, Sensex nosedived by 4,556.49 points or 5.9%, and that of Nifty is down by 1,303.15 points or 5.49%.