Indian stock markets took a sharp hit on Friday, with the BSE Sensex tumbling over 1,400 points and the Nifty50 slipping below 22,150. Widespread selling gripped the markets ahead of key GDP data and rising concerns over U.S. trade policies and a slowing economy. The total market capitalization of BSE-listed companies shrank by ₹8.9 lakh crore, bringing the total market value to ₹384.22 lakh crore.
By the close of trading:
- The Sensex dropped 1,414 points (1.9%) to settle at 73,192.
- The Nifty50 lost 418 points (1.9%), ending at 22,126.
- Market breadth was heavily negative, with only 400 stocks advancing against 2,221 declining on the NSE.
This marks the fifth consecutive month of losses for benchmark indices—the longest losing streak in 29 years. The decline is fueled by weak economic growth, slowing earnings, unpredictable U.S. trade policies, and persistent foreign investor selling. Since reaching record highs in late September, indices have fallen by 18%.
Why Is the Indian Stock Market Falling?
According to experts, there is buzz that Q4 earnings of the Indian banks are expected to come below market estimates. This led to more selling in the Indian stock market on Friday as the Q3FY25 earnings season was highly disappointing, and the market cannot digest this disappointing news in current conditions. 30% of the strength in the Nifty 50 index belongs to banking stocks, and this dip in the Nifty 50 and Sensex can be attributed to this downfall.
1. Concerns Over GDP Data
Investors are cautious ahead of India’s December quarter GDP data, which is set to be released after market hours on Friday. Analysts expect a rebound in economic growth, but concerns over slowing corporate earnings and foreign outflows continue to weigh on sentiment.
2. Uncertainty Over Trump’s Tariff Policies
Fresh U.S. tariff concerns added to the market volatility. On Thursday, Donald Trump announced new tariffs:
- 25% tariffs on Canadian and Mexican imports (effective March 4, instead of April 2).
- 10% tariffs on Chinese goods.
- A reaffirmation of 25% tariffs on European Union imports.
These unpredictable trade measures have created uncertainty for global markets, including India.
3. Reluctance Among Domestic Investors (DIIs)
Despite Foreign Institutional Investors (FIIs) aggressively selling stocks, Domestic Institutional Investors (DIIs) have not stepped in to support the market as they have in previous downturns. Avinash Gorakshkar of Profitmart Securities noted that DIIs are stuck at higher levels and are waiting for more clarity on market trends before making any major moves.
4. Impact of MSCI Index Rebalancing
The upcoming MSCI index reshuffling is also pressuring Indian markets. Anshul Jain, Head of Research at Lakshmishree Investment and Securities, explained that the rejig is causing fluctuations in trade volumes and fund flows, prompting both FIIs and DIIs to adjust their portfolios.
5. Pressure on IT Stocks
The global sell-off in technology stocks hit the Indian IT sector hard.
- The Nifty IT index plunged 3.2%.
- Persistent Systems, Tech Mahindra, and Mphasis fell up to 4.5%.
- The drop followed a sharp decline in Nvidia’s stock on Wall Street, triggering a sell-off in AI-related companies, including the “Magnificent Seven” tech giants.
6. Strengthening US Dollar and Capital Outflows
The US dollar index climbed to 107.35, nearing multi-week highs, as trade war concerns fueled demand for safe-haven assets.
- A stronger dollar makes foreign investments more expensive, leading to capital outflows from emerging markets like India.
Outlook for Investors
With markets facing economic uncertainty, global trade risks, and a weak earnings outlook, investors should exercise caution. Experts suggest waiting for stability before making any major investment decisions.
