Mumbai: The Indian stock markets experienced a sharp decline on Tuesday as US President Donald Trump began his second term with aggressive policy moves, including signing multiple executive orders and hinting at trade tariffs targeting BRICS nations.
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Market Overview
The BSE Sensex plunged 1,235 points (1.6%) to close at 75,838, while the Nifty 50 dropped 320.1 points (1.37%) to end at 23,024. This market downturn led to investors losing over ₹7 lakh crore in value.
Key Triggers for the Decline
Trump’s remarks regarding imposing 100% tariffs on countries reducing their reliance on the US dollar for global trade dampened investor sentiment. Market experts attribute the negative reaction to fears of escalating trade tensions, particularly involving BRICS nations.
Performance of Sensex and Nifty
- Sensex: Only two stocks closed in the green – UltraTech Cement and HCLTech.
- Nifty 50: Eight stocks managed gains, led by Apollo Hospitals (+2.76%), followed by UltraTech Cement, BPCL, Tata Consumer Products, and JSW Steel.
On the losing side, Zomato shares dropped nearly 11%, making it the biggest drag on the Sensex. Other significant losses were seen in ICICI Bank and Mahindra & Mahindra.
Sectoral and Broader Market Impact
- Sectoral Performance:
- FMCG was the only sector with positive movement (+0.34%).
- Consumer Durables was the worst-performing sector, down 3.59%, followed by Realty (-3.04%).
- Other sectors like Nifty Bank (-1.33%), Financial Services (-1.31%), Auto (-1.04%), and Media (-1.04%) also recorded losses.
- Broader Markets:
- Nifty Smallcap 100 dropped by 1.70%.
- Nifty Midcap 100 declined by 1.68%.
Also Read: Zomato Clocks 57% Net Profit Drop at Rs 59 Crore in Q3
Investor Sentiment and Market Commentary
Investor confidence was weakened by disappointing Q3 earnings reports and sustained selling by foreign institutional investors (FIIs), who offloaded equities worth ₹48,023 crore as of January 20.
According to Vikram Kasat from PL Capital-Prabhudas Lilladher, large-cap stocks like Zomato, Reliance Industries, and Kotak Bank significantly dragged down benchmark indices. Zomato alone contributed 170 points to Sensex’s decline after reporting a 57% year-on-year drop in net profit for the December quarter.
India VIX Surge and Currency Performance
India’s fear gauge, the India VIX Index, surged 5.92% to 17.39, reflecting heightened market volatility.
The rupee gained 0.20 paise early in the session to trade at 86.29, buoyed by a weaker dollar following President Trump’s inauguration ceremony.
Global Context
The US markets remained closed on Monday in observance of Martin Luther King Jr. Day. However, the announcement of tariffs on imports from Mexico and Canada during Trump’s inauguration introduced further uncertainty in global markets.
Stay tuned for more updates as the markets navigate these developments.