Sensex Today: On Friday, February 28, 2025, the Indian benchmark indices, Nifty50 and Sensex, experienced a significant drop, driven by the impact of President Trump’s tariffs, ongoing Foreign Institutional Investor (FII) selling, and weak global cues.
The Nifty50 index opened lower at 22,433 and quickly fell to an intraday low of 22,249, marking a loss of over 1.20% within minutes of the opening bell. The BSE Sensex also opened down at 74,201 and hit an intraday low of 73,626, registering a loss of nearly 1,000 points in the early session. Similarly, the Bank Nifty index opened at 48,437 and dropped further, reaching an intraday low of 48,161, reflecting a loss of around 1%.
The total market capitalization of all listed companies on the BSE dropped by Rs 5.8 lakh crore, bringing it to Rs 387.3 lakh crore.
Why Is Indian Share Market Falling Today?
Concerns Ahead of GDP Data Release
Fears of slowing economic growth, weakening earnings, and Trump’s tariff policies have affected the benchmarks. Ongoing foreign investor selling has also played a role. These factors have caused the benchmarks to fall 14% from their record highs in late September.
Investors are concerned. They are closely monitoring the release of the December quarter GDP data. This data is set to be published after market hours on Friday. A Reuters poll of economists suggests that India’s economy likely showed a rebound during the quarter.
Uncertainty Surrounding Trump’s Tariff Policies
On Thursday, Trump announced that the 25% tariffs on imports from Canada and Mexico would take effect on March 4. This is ahead of the previously stated April 2 timeline. He also imposed a 10% tariff on Chinese goods and reiterated his commitment to 25% tariffs on goods from the European Union. This unpredictability surrounding trade policies has added to market volatility.
On Friday, February 28, 2025, the Indian stock market experienced a significant downturn, with the BSE Sensex plunging over 1,000 points and the NSE Nifty 50 falling more than 300 points. This sharp decline has raised concerns among investors and analysts alike. Several key factors have been identified as contributors to this market turmoil.
Global Trade Tensions Escalate
A primary catalyst for the market’s decline is the escalating global trade tensions. U.S. President Donald Trump announced a 25% tariff on imports from Canada and Mexico, set to take effect on March 4, 2025. Additionally, there are proposed tariffs targeting China. These protectionist measures have heightened fears of a global trade war, leading to increased volatility in international markets. The ripple effects of these policies have adversely impacted investor sentiment in India, contributing to the sell-off in equities. citeturn0news34
Concerns Over the U.S. Economy
Recent economic indicators from the United States have added to global market anxieties. A rise in U.S. jobless claims suggests potential weaknesses in the labor market, while inflationary pressures continue to mount. These factors have led to speculation about possible interest rate hikes by the Federal Reserve, which could tighten global liquidity. Such developments often prompt foreign investors to reassess their exposure to emerging markets, including India, leading to capital outflows and added pressure on domestic equities. citeturn0news34
Sectoral Impacts
The market downturn has been broad-based, affecting multiple sectors:
- Information Technology (IT): The BSE IT index witnessed a significant decline, influenced by concerns over the U.S. economy and potential changes in outsourcing policies. Major IT firms, which rely heavily on U.S. clientele, faced selling pressure as investors anticipated potential revenue impacts. citeturn0news34
- Automobiles: Leading automobile manufacturers experienced stock declines. For instance, Maruti Suzuki India saw its shares drop by 2% following announcements about adjustments in their electric vehicle launch plans. Such strategic shifts have raised questions about future growth prospects in the auto sector. citeturn0news36
- Financials: While financial stocks have generally been resilient, the broader market sentiment has led to cautious trading. The Reserve Bank of India’s recent easing of loan regulations provided some relief, but concerns over asset quality and profitability persist amid the current economic climate. citeturn0news35
Foreign Institutional Investor (FII) Activity
Foreign Institutional Investors have been net sellers in the Indian equity markets in recent sessions. The combination of global uncertainties, such as trade tensions and potential shifts in U.S. monetary policy, has prompted FIIs to reduce their exposure to emerging markets. This capital outflow has exerted additional downward pressure on stock prices, exacerbating the market’s decline.
Domestic Economic Indicators
Investors are also exercising caution ahead of the release of India’s Gross Domestic Product (GDP) data for the third quarter. Anticipation of these figures has led to speculative trading, with concerns that the data may reflect a slowdown in economic activity. Such apprehensions have contributed to the overall negative sentiment in the markets. citeturn0search6
Market Outlook
The confluence of global and domestic factors has created a challenging environment for the Indian stock markets. Analysts suggest that until there is clarity on international trade policies and stabilization in global economic indicators, markets may continue to experience volatility. Investors are advised to adopt a cautious approach, focusing on fundamentally strong stocks and diversifying their portfolios to mitigate risks associated with such turbulent times.
In conclusion, the significant drop in the Sensex and Nifty can be attributed to a combination of escalating global trade tensions, concerns over the U.S. economy, sector-specific challenges, FII outflows, and apprehensions regarding upcoming domestic economic data. Navigating this complex landscape requires informed decision-making and a focus on long-term investment horizons.
