Sensex falls 550 points as metal stocks face tariff concerns
What's the story
India's key equity indices, the Sensex and Nifty 50, plunged sharply today. The fall was largely attributed to rising global trade tensions and lackluster Q3 earnings.
At around 11:10am, the Sensex had plunged by 560 points or 0.7% to 77,300 while the Nifty had slipped by 172 points or 0.7% to 23,387.
Among sectoral indices, financials, oil and gas, and metals weighed on the Nifty. Meanwhile, auto, telecom, and FMCG provided some support.
Market impact
Metal stocks suffer as US announces new tariffs
The downturn was led by metal stocks, after US President Donald Trump announced new tariffs on all steel and aluminum imports into the US. The move is expected to have major implications on global trade flows.
Indian companies like SAIL, Tata Steel and Vedanta saw their shares fall by 4% each. The metals index itself dipped by 2% after Trump's tariff declaration.
Wider impact
Broader markets and rupee also feel the pinch
The broader markets also bore the brunt of these developments, with NSE Midcap and Smallcap indices declining by 1.5% and 1.8%, respectively.
Meanwhile, the Indian rupee hit a record low of ₹87.92 per dollar, mirroring losses in Asian currencies after Trump's tariff announcement.
The weakening rupee is likely to discourage foreign investors from investing in dollar-denominated returns, leading to further outflows from Indian equities.
Investor response
FIIs pull out from Indian equities amid market volatility
Foreign Institutional Investors (FIIs) have pulled out ₹10,179 crore worth of Indian equities so far in February.
Higher US interest rates and a stronger dollar have made emerging markets less appealing.
As independent market analyst Ambareesh Baliga noted, "When the rupee is weak, dollar-denominated returns don't look attractive to foreign investors and hence FIIs are likely to continue pulling out funds."
Sector performance
Sectoral indices show mixed performance amid market volatility
Tata Steel, JSW Steel, Cipla, Power Grid Corporation of India Limited (PGCIL), and Hindalco were among the top losers on the Nifty 50 index.
Meanwhile, Bharti Airtel Limited (Airtel), Adani Ports and Special Economic Zone Limited (APSEZ), Mahindra & Mahindra Limited (M&M), Bharat Electronics Limited (BEL), and Britannia Industries Limited were among those who managed to register gains despite market volatility.