Sensex tanks 1,000 points: What's behind today's stock market crash?
What's the story
India's top stock indices, Sensex and Nifty, plunged heavily on Friday, declining over 1.3% each.
The fall was largely fueled by investors' fears over US President Donald Trump's new tariff threats and expectation of key GDP data for the December quarter.
At around 10am, the Sensex had tumbled by over 965 points to 73,647 while Nifty had declined by 300 points to 22,244.
Market downturn
Nifty 50 index records longest losing streak in 29 years
The Nifty 50 index has fallen over 4% in February, its fifth consecutive month of losses. This is its longest losing streak in nearly three decades.
The slump is due to a combination of slowing economic growth, fading earnings momentum, Trump's trade policies, and persistent selling by foreign investors.
Together, these factors have dragged the benchmarks down by 14% from their record highs in late September.
Tariff impact
Trump's new tariffs trigger market instability
On February 27, Trump announced his plan to impose 25% tariff on Mexican and Canadian goods from March 4.
This will be in addition to a new 10% duty on Chinese imports, bringing the total duty on Chinese goods to 20%.
These measures are in response to the ongoing flow of lethal drugs into the US.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, expressed caution about market stability due to these developments.
Market movements
Foreign inflows and domestic purchases impact Indian equities
The market is also closely watching foreign inflows as MSCI's February 2025 rebalancing adjustments come into effect, potentially triggering $1.4 billion in inflows.
Throughout February, foreign institutional investors have sold off Indian equities worth ₹47,349 crore. In contrast, domestic institutional investors have made net purchases amounting to ₹52,544 crore.
International influence
Global cues influence Indian stock market performance
Global cues have also impacted the performance of the Indian stock market.
Wall Street closed lower on Thursday amid disappointing US economic data and a pullback in tech stocks.
European markets fell due to renewed tariff concerns, while Asian markets followed the suit, mirroring declines in the US after a sell-off in chipmaker NVIDIA, which dropped 8% on weak Q1 2025 outlook.