NEW DELHI: India’s equity markets fell sharply on Tuesday as investors turned cautious after the newly sworn-in US President, Donald Trump, slapped trade tariffs on goods entering from neighbouring countries.
The benchmark BSE Sensex fell 1,235.08 points or 1.60% to settle at 75,838.36. This is the first time in seven months that the index has closed below the 76,000 mark. The NSE Nifty fell 320.10 points or 1.37% to close at 23,024.65.
The big selloff wiped out more than Rs 7 lakh crore of investors’ wealth, as the total market capitalisation of BSE-listed firms came down to Rs 424.3 lakh crore on Tuesday, from Rs 431.6 lakh crore earlier.
In the broader market, the BSE Midcap and BSE Smallcap indices dropped 2% each.
On his first day in office, Trump declared that he would impose 25% tariff on all goods entering the United States from Canada and Mexico, alongside a 10% tariff on Chinese goods. He also hinted at higher tariffs on several countries, raising chances of a full-blown tariff war among nations.
“Markets were on a cautious mode in the last few sessions, but saw frenzied selling on Tuesday as investors now fear that Trump’s inaugural speech to safeguard America’s interest could hurt economic prospects of many countries, including India, going ahead,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
Tapse warned that while foreign investors continue to offload domestic shares at will, any further increase in US bond yields could trigger massive selling. Foreign institutional investors (FIIs) have sold equities worth Rs 48,023 crore as of January 20, 2025.
Vikram Kasat, Head (Advisory), PL Capital-Prabhudas Lilladher said investor sentiment remained weak amid lacklustre Q3 earnings and sustained selling by FIIs. Vinod Nair, Head of Research, Geojit Financial Services said that the weak recovery in the ongoing Q3 earnings, coupled with a depreciating INR, is likely to prompt further FII outflows.
“Mid- and small-cap stocks underperformed compared to the main indices. The realty sector was hit the hardest due to weak pre-result updates, while banks suffered due to rising asset quality stress. Additionally, the expectation of an interest rate hike by Bank of Japan is dampening market sentiment,” added Nair.
Among sectoral indices, Nifty Realty and Consumer Durables fell over 4% each. Zomato was the biggest loser in the Sensex pack.