Global Recessionary Fears Trigger Further Corrections In Capital Market Stocks: Angel One, Nuvama, MCX Shares Fall Up To 7 Per Cent

Capital market stocks slumped up to 7.4 per cent on April 4, amid weakening market sentiments, triggered by US President Donald Trump's tariffs announcement on its major trading partners. This has stoked fears of a potential trade war, which could further lead to global recession.

The Nifty Capital Market index, which comprises 15 stocks that represent the capital market theme, slumped 3.56 per cent. From the index, Angel One saw the sharpest correction, falling 7.4 per cent. 360 ONE WAM followed with 6.41 per cent decline, Nuvama Wealth Management fell 6.06 per cent, and Multi Commodity Exchange (MCX) slipped 5.17 per cent.

Motilal Oswal Financial Services, HDFC AMC, Nippon Life India Asset Management, Anand Rathi, CAMS, and KFin Tech fell in the range of 3 per cent to 4 per cent. Other stocks like Central Depository Services Limited (CDSL), UTI AMC, BSE Ltd. Indian Energy Exchange and Aditya Birla Sun Life AMC also ended in the red. All the stocks in the index closed in the negative territory.

Typically, when the market falls, there is a decrease in investor confidence, which leads to lower trading activity. This, in turn, can potentially be disadvantageous for capital market companies such as stock exchanges, depositories, and wealth management firms, as they earn revenue from trading and transactions. Generally, less market activity means less business for these firms.

The domestic stock market has already been reeling under pressure for more than six months now. The tariffs announcement-induced recessionary fears have added to the weak sentiments in the market.

Bajaj Broking Research said, “Investors fear that aggressive trade policies by the US would lead to retaliatory measures from other countries, escalating into a full-scale trade war. Such an outcome could disrupt global supply chains and slow economic growth.”

Sensex and Nifty have declined 12.33 per cent and 12.84 per cent from their all-time highs hit in late September 2024. Mirroring the benchmark indices, the Nifty Capital Market index has corrected over 21 per cent from its record high.

According to brokerage firm Elara Capital, the reciprocal tariffs on India could lead to a 40 basis point (bps) drag year-on-year on FY26 nominal GDP growth at the worst.

The brokerage said, "The COVID-19 shock is a testament to the fact that supply chains do not reorient quickly even when there is a relative comparative cost advantage. As such, our biggest worry at this point would be lower global growth led by the US & China. If tariffs continue longer, we see a certain end to ‘US exceptionalism’ and an expansionary Fed, as growth risks may overshadow inflationary concerns."