Why Is Market Down Today? Sensex Plunges Over 1200 Points; Investors Lose Rs 10 Lakh Crores

Indian stock markets BSE Sensex has crashed by a 1204.14 points or 1.56 percent at 76,107.66 after its previous close of 77,311.80 on Monday whereas NSE Nifty index is currently at 23,039.15, down 342.45 points or 1.46 per cent.

The Indian stock market tumbled sharply as escalating US trade tensions, foreign fund outflows, and weaker-than-expected corporate earnings triggered a broad-based selloff. The Nifty and Sensex witnessed significant declines, while the midcap and smallcap indices plunged by up to 3.5 per cent each, reflecting heightened investor anxiety. The market indices had also tumbled in early trade on Monday as the rupee fell to a record low against the US dollar. Decline in metal and energy stocks also weighed on the market. Rupee appreciated today above 87 per USD for the first time since January 31.

Global Trade Tensions: Tariff Hikes Raise Economic Fears

The slump was largely driven by US President Donald Trump's executive orders issued on February 10, imposing a 25 per cent tariff on steel imports and raising aluminium tariffs from 10 per cent to 25 per cent.

The move ended tariff exemptions for key trading partners such as Canada, Mexico, and Brazil, stoking fears of a wider global trade war. These measures have heightened concerns over global economic growth, impacting investor sentiment worldwide.

Currency Pressure: Rupee Depreciation and FII Outflows

Adding to the turmoil, the rupee hit a record low of 88 per US dollar during intraday trading on Monday.

Sandip Agarwal, Fund Manager and Co-founder of Sowilo Investment Managers LLP, highlighted that "the rupee's depreciation has intensified FII selling, as it diminishes their real returns."

Although the rupee staged a mild recovery later in the day, nearly $9 billion worth of foreign investments have exited Indian equities so far this year.

Earnings Impact: Disappointing Q3 Results Weigh on Sentiment

Poor corporate earnings further dampened market mood. Eicher Motors and Escorts Kubota stocks plummeted by 7 per cent and 5.3 per cent, respectively, after reporting lower-than-expected profits for Q3 FY25.

Globally, markets echoed similar concerns. Hong Kong’s Hang Seng slipped by 0.3 per cent, while S&P 500 futures were down by 0.2 per cent amid rising caution following Trump’s tariff escalation.

Valuation Worries: Small and Midcap Segments Under Pressure

The market's bearish tone was further amplified by ongoing valuation concerns in the midcap and smallcap segments.

S Naren, CIO of ICICI Prudential AMC, recently warned that "absurd" valuations in these categories could pose significant risks. He advised investors to exit small- and mid-cap stocks entirely, sparking debates across the mutual fund industry and reinforcing negative sentiment.

The combination of tariff shocks, currency pressure, disappointing earnings, and valuation concerns continues to cast a shadow over the Indian stock market, leaving investors bracing for further volatility.

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