MUMBAI: India’s equity market fell sharply on Tuesday amid the ongoing crack in IT stocks and investors rushing to profits as global cues turn hostile. The BSE Sensex crashed more than 1,350 points to hit an intraday low of 81,934, while the NSE Nifty 50 fell 1.5% to 25,327 during the session.
The market is facing increased uncertainty after the US Supreme Court struck down President Donald Trump’s global tariff. Though a big positive for India and many nations, this has prompted the Trump administration to double down on trade barriers.
According to reports, officials now plan to invoke Section 232 of the 1962 Trade Expansion Act as a workaround for the overturned measures. Trump has warned overseas governments that aligning with the court’s ruling could trigger steeper duties on their US-bound exports.
"President Trump’s State of the Union address today and the message that he will convey will be keenly watched by markets globally. The EU freezing the deal with the US in the light of the tariff changes following the US Supreme Court verdict and Trump’s warnings to countries backing away from deals indicate that the tariff drama has more in store for economies and markets," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
The renewed tension between Iran and the US, and its impact on crude oil prices is also impacting market sentiments. The Trump administration has threatened Iran with military action. This has pushed Brent crude prices near a six-month high of $72 per barrel.
“With the global scenario getting murkier, trust amongst the developed economies is declining. Further, erratic abrupt US action is disrupting normalcy on multiple fronts. Changing stance of such decisions creates chaos and confusion, which covers up the pain points and does not address the real shortcomings,” said Sandeep Parwal, SPA Group Chairman.
He added, “In this multipolar world, investor strategy must shift from chasing higher returns to capital protection. The current high valuation, with extreme concentration risk in US market have an adverse risk-reward potential. The upside from here is limited but a deeper decline is more likely. Positioning portfolio with higher liquidity or a conservative outlook by investing in Gold, Silver and commodity or defence sector operation, debt or arbitrage funds will be preferred.”
Meanwhile, the ongoing rout in IT stocks is also contributing to the market fall. The Nifty IT index crashed by almost 4% in intraday trade on Tuesday, taking the total fall to about 20% in February amid concerns over AI-led disruptions and elevated US interest rates.