The Indian stock market has experienced a significant downturn, with equity benchmark indices Nifty50 and BSE Sensex plunging over 2% in recent trading sessions. This decline marks the fifth consecutive day of losses, raising concerns among investors regarding the broader economic environment and geopolitical factors influencing market stability.
In the span of the last five trading days, the BSE Sensex has fallen by more than 2,100 points, dropping from 85,762.01 on January 2 to an intraday low of 83,402.28. Similarly, the NSE Nifty 50 has seen a significant decline, ending Friday at 25,683.30, down 194 points or 0.75%. The BSE Sensex finished the day at 83,576.24, down 605 points or 0.72%.
A key driver behind the market crash is the substantial sell-off by foreign institutional investors (FIIs). On Thursday, FIIs sold shares worth Rs 3,367.12 crore, marking the fourth consecutive session of net selling. This sustained outflow of overseas funds is intensifying the weakness in the indices amid an uncertain global backdrop, reinforcing a risk-averse mindset among investors who are already navigating adverse external conditions.
Additionally, investor concerns have been heightened by U.S. President Donald Trump’s recent comments regarding potential increases in tariffs on Indian exports. Trump has indicated support for a bill proposing tariffs as high as 500% on countries purchasing Russian oil, a move that has alarmed market participants. Ongoing discussions surrounding a bilateral trade agreement between the U.S. and India remain unresolved, further exacerbating tension in the trade relationship.
The uncertainty surrounding Trump’s tariff actions has been compounded by an impending ruling from the U.S. Supreme Court. If the court finds the tariffs unlawful, it could necessitate the return of approximately $150 billion to importers, a scenario that would have significant implications for global trade. Market analysts are closely watching this development, with speculation about the potential impact of the ruling on Indian markets.
Moreover, soft cues from overseas markets have reinforced the caution felt by Indian investors. Equities across Asia have slipped as investors await crucial economic reports and the Supreme Court’s ruling on Trump’s tariffs. This backdrop of uncertainty is intensified by rising crude oil prices, which have put additional pressure on the Indian economy due to its reliance on imported oil.
Technical indicators also point to ongoing weakness in the market. Analysts note that key benchmarks have broken below critical support levels, suggesting a continuation of the bearish sentiment. The market’s recent formation of a long bearish candle indicates further potential declines if it remains below the established support levels.
As the markets navigate these turbulent waters, experts remain divided on potential outcomes. While some argue for long-term investment opportunities in sectors like financials and consumer discretionary amidst this broader weakness, others caution about the possibility of further declines if key technical levels are breached.
Overall, the current atmosphere in the Indian equity markets is marked by heightened uncertainty, as global trade tensions and political developments in the U.S. intertwine to shape investor sentiment and market dynamics. The coming days will be crucial, as market participants await further developments that could either exacerbate the ongoing sell-off or provide a glimmer of stability.
