The Indian stock market has taken a severe hit, with escalating global trade tensions triggering a sharp sell-off across equities. Investors have been dumping risky assets since the opening bell, leading to a massive slump in benchmark indices. The Nifty 50 plunged by 440 points in today’s session, hitting a low of 22,105 points, while the Sensex dropped 1,453 points to touch 73,159.
This ongoing correction has pushed the Nifty 50 down by 4,172 points (16%) from its September peak of 26,277 points, while the Sensex has declined by 12,819 points (15%) from its peak of 85,978. The Indian market is now witnessing its worst losing streak in decades, with indices falling for five consecutive months—something not seen since 1996. February is shaping up to be the second-worst month for the Nifty 50 since its inception in 1990.
Broader Market Sees More Pain
The selling pressure has been even more intense in the broader market. The Nifty Midcap 100 index plunged 3.4% today to 47,485 points, marking a steep 22% correction from its peak. The small-cap segment fared even worse, with the Nifty Smallcap 100 index skidding 3.55% to a low of 14,617 points, reflecting a 26% drop from its peak of 19,640 points.
Across sectors, 30 of the Nifty 50 stocks are now trading 20-44% below their one-year highs. Tata Motors emerged as the worst performer in the large-cap space, plummeting 47%. In the mid-cap segment, Vodafone Idea has lost 60% from its peak, while Sterling and Wilson Renewable Energy leads the small-cap decliners, down 70% from its one-year high.
Global Trade Tensions Weigh on Sentiment
Investor confidence has taken a severe hit due to a combination of domestic and global factors. The biggest trigger remains the rising trade tensions sparked by the U.S., which has prompted Foreign Portfolio Investors (FPIs) to exit Indian markets at an alarming pace. Over the past five months (October 2024-February 2025), FPIs have offloaded ₹3.11 lakh crore from Indian exchanges, leaving domestic investors to absorb the selling pressure.
Trump’s Trade War Rattles Global Markets
The latest market rout has been fueled by U.S. President Donald Trump’s aggressive stance on global trade. On Thursday, he confirmed that his proposed tariffs on Mexico and Canada would take effect on March 4, citing concerns over drug trafficking.
Further escalating tensions, Trump announced an additional 10% tariff on Chinese imports, raising fears of retaliation from Beijing. The situation is expected to deteriorate further, with Trump threatening a 25% tariff on imports from the European Union. Additionally, he has proposed similar tariffs on automobile, semiconductor, and pharmaceutical imports, with a formal announcement anticipated by April 2.
Impact on the U.S. and Federal Reserve
Trump’s aggressive trade policies are not only unsettling global markets but also raising concerns among U.S. consumers and the Federal Reserve. American consumers fear a sharp rise in prices due to the tariffs, which could slow economic growth. Meanwhile, the Federal Reserve, which has been trying to keep inflation near its 2% target, is now worried that rising costs could derail its monetary policy plans. This has already influenced policymakers to pause interest rate cuts in January.
What’s Next for Indian Markets?
With foreign investors pulling out funds and global economic uncertainties mounting, Indian equities remain under pressure. Unless there is a resolution to the trade tensions or signs of stability in global markets, the bearish sentiment could persist, leading to further downside risks.
For investors, this is a time to tread cautiously, diversify portfolios, and focus on long-term value investments. Volatility is likely to remain high in the coming weeks, making it crucial for market participants to stay informed and make well-researched decisions.
Disclaimer:
This article is for informational purposes only and should not be considered financial advice. Market conditions are subject to change, and investors should conduct their own research or consult a financial advisor before making any investment decisions.
To receive your copy of FREE eBook on Financial Freedom Subscribe Here
This blog is purely for educational purposes. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.
