The Indian stock market faced a volatile trading session on April 9, with both the Sensex and Nifty 50 under pressure as domestic and global macroeconomic developments weighed heavily on sentiment. Investors witnessed a tug-of-war between bulls and bears as the Nifty attempted to defend the 22,400 level, a critical support zone, amid concerns triggered by the Reserve Bank of India's monetary policy update and escalating US-China trade tensions.

RBI Slashes Repo Rate and Cuts FY26 GDP Forecast

The highlight of the trading day was the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announcement. The central bank made a 25 basis points cut in the repo rate, taking the key lending rate down, and shifted its stance to ‘accommodative’, indicating a pro-growth approach.

However, what grabbed more attention was the RBI’s revised GDP growth estimate for FY26, which was trimmed from 6.7% to 6.5%. According to RBI Governor Sanjay Malhotra, the central bank sees CPI inflation at 4% for the same fiscal year, compared to the previous forecast of 4.2%.

This downward revision hints at a weaker-than-expected economic outlook, despite the RBI’s efforts to stimulate growth through monetary easing.

“India will be one of the least impacted large economies by global disruptions, but concerns remain. The repo rate cut adds monetary stimulus,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Market Reaction: Bears Take Charge, But Bulls Defend 22,400

By 12:01 PM, the BSE Sensex had tumbled 385.23 points or 0.52% to 73,841.85, while the Nifty 50 declined 127.70 points or 0.57% to 22,408.15.

Market breadth was negative, with 2,179 stocks declining, while only 1,036 advanced, and 136 remained unchanged.

The steep drop came despite the rate cut, suggesting that markets had already priced in the move, and were more focused on future economic projections and global cues.

Global Jitters Intensify as Trump Rekindles Tariff War

Adding fuel to the fire was the resurgence of global trade war concerns. U.S. President Donald Trump, in a controversial move, announced a staggering 104% tariff on all goods imported from China. This was a sharp escalation from earlier threats, and came as Beijing retaliated with 34% duties on U.S. goods.

If China retaliates further, experts fear a full-blown trade war, which could severely impact global supply chains, international commerce, and investor sentiment.

This announcement triggered a massive sell-off on Wall Street overnight, with the S&P 500 plunging below the 5,000 mark, marking a 19% drop from its all-time high. The Dow Jones Industrial Average fell 0.8%, while the Nasdaq Composite tanked 2.5%, led by losses in tech stocks.

Asian Markets Echo Bearish Mood

The tremors from the US tariff escalation were felt across Asian markets:

• Japan’s Nikkei 225 crashed 3%

• Hong Kong’s Hang Seng fell 2%

• Taiwan Weighted Index declined 2%

• Shanghai Composite and CSI 100 traded with losses

This broad-based global correction amplified fears of a looming economic slowdown or even stagflation, casting a long shadow over investor sentiment.

Crude Oil Declines: A Silver Lining for India

Amid the turmoil, one positive for the Indian economy was the sharp fall in global crude oil prices, which is a major relief for a net importer like India. Lower oil prices reduce inflationary pressure and help narrow the fiscal deficit.

However, experts warn that the benefits of lower crude may be outweighed by global economic risks and potential stagflation scenarios if the tariff war continues.

Strategic Insights from Experts

VK Vijayakumar emphasized that while India may remain relatively insulated due to its strong domestic consumption, the overall macro backdrop remains fragile. He urged investors to be cautious and stay alert to global triggers.

“Investors should be cognisant of the risks posed by stagflation and further global recessionary signals. The 25 bps cut is a short-term boost but not a silver bullet,” he noted.

Investor Takeaways and Outlook

• Monetary Easing Isn’t Always Market-Friendly: While a repo rate cut typically cheers equity markets, it did not translate into gains this time as the downward GDP revision spooked investors.

• Global Cues Remain Overwhelmingly Negative: The Trump-China tariff war and the Wall Street correction are weighing more heavily than domestic developments.

• Critical Support Holds—for Now: Despite the dip, the Nifty 50 managed to stay above 22,400, an important psychological level, hinting at buying interest at lower levels.

Looking Ahead

Market participants will be closely watching the next set of inflation and industrial production data, along with corporate earnings and any further geopolitical escalations.

Short-term volatility is likely to remain high, and traders are advised to keep stop losses tight and avoid overleveraging. Long-term investors should focus on quality stocks in defensives and domestic consumption sectors.

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