indian stock market Benchmark index BSE Sensex fell by over 1,200 points today, while Nifty 50 index closed below the 23,100 level after heavy losses in heavyweights Reliance Industries, ICICI Bank and Zomato. Investor sentiment was hit after US President Donald Trump announced the imposition of trade tariffs on neighboring countries soon after assuming office, leading to such a huge fall in the market. If you also invest money in the stock market or mutual funds, then there must be a feeling in your mind that will the market fall further? How far can Nifty fall if it reaches? What is the reason for such a huge decline in the market? Let us answer all your questions.
5 big reasons for the decline in the Indian market
1. Uncertainty about Donald Trump’s trade policy
Trump made several announcements as soon as he assumed office, including imposing tariffs on Canada and Mexico. Trump has threatened to increase tariffs on many countries including India. Their visa policies may also impact the Indian technology sector. Let us tell you that Trump has announced to impose 25 percent tariff on Canada and Mexico. He also has a slant on India. Its effect was seen on the Indian market today.
2. Cautious stance before Union Budget 2025
Finance Minister Nirmala Sitharaman will present the budget on Saturday, February 1. After Trump, investors are now eyeing the budget. This time, expectations are high that the government will announce measures to boost consumption, strengthen the rural sector and support manufacturing and infrastructure, while keeping the fiscal deficit from rising. Any disappointment in expectations could further blow the already weak market sentiment. This also affected the market.
3. Selling by foreign investors
Amid the strengthening of the US dollar and increase in bond yields, foreign portfolio investors (FPIs) are continuously withdrawing money from the Indian market. This is one of the major reasons for the decline in the Indian stock market in recent months. Except for January 2, FPIs have been selling Indian equities every day in January, till January 20 they have sold about ₹51,000 crore.
4. Weak results in the third quarter
After the decline in the first and second quarter earnings of the companies, there has been no significant improvement in the December quarter earnings too, with mixed trends seen across various sectors. Experts say that market sentiment remains weak due to disappointment on the earnings front. This is also pushing the market down.
5. Signs of weakness in the Indian economy
There are signs of weakness in the Indian economy, due to which there is an atmosphere of caution in the market. The pace of GDP has slowed down to its lowest level in two years. There is no increase in demand in the market. This is also affecting market sentiment.
There is still a possibility of a decline in the market
According to Shrikant Chauhan, Head of Equity Research, Kotak Securities, benchmark indices fell sharply today. Nifty closed down 320 points, while Sensex closed down 1235 points. Among sectors, all major sectoral indices closed in the red, but the realty index fell the most, losing over 4 per cent. Technically, after a gap-up opening, the market faced continued selling at higher levels. We believe that, weakness will continue till the market trades below 23,100/76000. On the downside, the market may fall to 22,900/75500. Weakness is likely to continue further, which may drag the market towards 22850/75300. However, above 23100/76000, the market may bounce back, and move towards 23,250-23,300/76400-76500. The current market structure is unstable.
Investors lost ₹7 lakh crore today
Heavy selling in the Indian stock market today wiped out investors’ wealth worth over Rs 7.1 lakh crore as the total market capitalization of BSE-listed firms declined to around Rs 424.5 lakh crore from Rs 431.6 lakh crore in the previous session.
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