Explained: Investors Lose ₹10 Lakh Crore, Why is Stock Market Down Today?
The Indian stock market declined for the fifth consecutive trading session on Tuesday. The fall was majorly attributed to decline banking, auto, metal, and IT stocks and shifts in U.S. trade policies.
Explained: Investors Lose ₹10 Lakh Crore, Why is Stock Market Down Today?
Indian benchmark indices declined for the fifth consecutive trading session on Tuesday. The decline was majorly driven by fall in banking, auto, metal, and IT stocks. Weak Q3 earnings and concerns surrounding U.S. trade policy gave a severe blow to the investor sentiments.
As of 1:30 pm, Sensex tumbled 1,106 points, or 1.43% to trade at 76,205.52, while Nifty50 fell by 349 points, or 1.49% clocking at 23,032.
All major sectors declined wherein smallcap and midcap indices dropped by 3.9% and 3.5%, respectively. Market capitalisation of BSE-listed companies were down ₹9.87 lakh crore to reach 407.95 lakh crore.
Shares of HDFC Bank, ICICI Bank, and Kotak Mahindra Bank were the major laggards falling down by 3%.
Why did the market fall?
Tariff hike on steel and aluminium
US President Donald Trump on Monday announced to increase tariffs on imports of steel and aluminum by imposing a duty of 25% “without exceptions or exemptions.” The move aims to bolster domestic industries but also poses risk of all out trade war.
Trump also eliminated country-specific exceptions and hundreds of product-specific tariff exclusions among many. As per a White House official, the tariffs will take into effect from March 4. The heightened measures are directed towards countries including Mexico, Canada, Brazil, South Korea and various other nations who previously benefitted from certain reliefs.
The move aims to simplify tariffs on metals “so that everyone can understand exactly what it means,” Trump told reporters. He said, “It's 25% without exceptions or exemptions. That's all countries, no matter where it comes from, all countries.”
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Trump’s latest decision to impose 25% tariffs on steel and aluminum will impact countries like Mexico, Brazil, South Korea, and Vietnam the most. Metal prices will remain soft for a long time.”
Markets Await Fed Chair Powell’s Testimony
Investors are keeping a close eye on Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking, Housing, and Urban Affairs Committee. His statement with respect to tariffs and inflation will play a key role in drawing out market insights.
FII Outflows
This year Foreign Institutional Investors (FIIs) dumped Indian equities worth $9.94 billion, NSDL data showed.
Surging Bond Yield and Dollar Index
The U.S. 10-year Treasury yield stands at 4.495%. The dollar index has clocked 108.36, leading to heightened outflows from emerging economies like India. Notably, higher bond yields make U.S. assets more attractive, while a strong dollar increases foreign capital costs, thereby giving major blow to investor sentiments.
