MUMBAI: Fears of an escalating global trade war and a sell-off in US equities once again weighed heavily on the Indian equity markets, with the benchmark indices – BSE Sensex and NSE Nifty – dropping about 2% each on Friday.
The local market, grappling with concerns over expensive valuations and a continued exodus of foreign institutional investors (FIIs), has now corrected 16% (benchmarks) from its record highs in late September 2024.
The Sensex plunged 1,410 points, or 1.9%, to close at 73,198, while the Nifty lost 420 points, or 1.9%, to settle at 22,125. February 2025 marks the fifth consecutive month of losses for the benchmarks, the longest losing streak in nearly three decades.
In the broader market, the Nifty Smallcap 100 index tumbled over 3%, and the Nifty Midcap 100 index declined 2.5% on Friday. The aggressive sell-off wiped out approximately Rs 9 lakh crore from investors' wealth, bringing the total loss to Rs 95 lakh crore since the correction began in late September last year.
The market capitalization of BSE-listed companies, which stood at Rs 479 lakh crore on September 27, 2024, dropped to Rs 446 lakh crore by January 1, 2025, and further plummeted to Rs 384 lakh crore by February 28. Meanwhile, FIIs have offloaded over Rs 46,000 crore through exchanges this month as of February 27, taking the total outflow in 2025 to over Rs 1.33 lakh crore.
Analysts attributed Friday’s decline to U.S. President Donald Trump’s decision to impose a 25% tariff on imports from Canada and Mexico starting next week, along with an additional 10% tariff on Chinese goods. In response, China stated it would take all necessary countermeasures and warned that the new tariffs could disrupt ongoing dialogue.
“Adding to market jitters, the potential imposition of tariffs on the European Union has further fueled uncertainty. As investors navigate this volatility, all eyes are on the domestic Q3 GDP data, which could provide vital insights into the economic recovery trajectory and influence market direction,” said Vinod Nair, Head of Research at Geojit Financial Services.
Mahindra & Mahindra, Bharti Airtel, Infosys, Tata Motors, Titan, Tata Consultancy Services, Nestle and Maruti were also among the major laggards.
HDFC Bank emerged as the only gainer from the pack.
In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled with deep cuts.
European markets were trading mostly lower.
US markets ended sharply lower on Thursday.
"The national market experienced a sharp decline amid heightened bearish sentiment largely influenced by weak global cues. The decline was largely triggered by fear of the implementation of 25 per cent tariff on US imports from Canada and Mexico, set to take effect next week, along with an additional 10 per cent tariff on Chinese goods," Vinod Nair, Head of Research, Geojit Financial Services, said.
Adding to market jitters, the potential imposition of tariffs on the European Union has further fuelled uncertainty, he said.
"As investors navigate this volatility, all eyes are on the domestic Q3 GDP data, which could provide vital insights into the economic recovery trajectory and influence market direction," Nair added.