Sensex, Nifty Down, Key Reasons Behind Today’s Fall

The equity markets continued their declining spree on March 4 on the back of concerns looming around U.S. tariffs.

Sensex opened at 72,817.34, down from previous day’s close of 73,085.94. The 30-share barometer tumbled down to the day’s low of 72,633.54. Nifty slumped by nearly 150 points , breaking the crucial 22,000 level.

As of 9:40 am, Sensex was down by 265.30 points to trade at 72,820.64, while Nifty crashed by 104.85 points to 22,014.45.

Key reasons behind stock market’s fall

1. Trump-Induced Tariff and Uncertainty in global trade

The trade policy adopted by the U.S. President Donald Trump has caused jitters in the global markets. The U.S. has levied a 25% tariff on Canada and Mexico, while also imposing additional 10% duty on China, thereby raising total tariff to 20%.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Uncertainty unleashed by Trump is aggravating global trade. The retaliation to these Trump tariffs is yet to be seen, but it will certainly come. If his tariff policy continues like this and starts affecting other countries, it will be bad for global trade and the economy. India will not be spared.”

Vijaykumar warned that soaring inflation in the U.S. could force the Federal Reserve to keep higher interest rates in the coming times, which could directly lead to steep market corrections or even a crash. This can also put continuing pressure on emerging markets like India.

2. Fall in IT Stocks

Overnight decline in U.S. tech companies has deeply impacted the Indian IT companies as many among them depend on businesses from the U.S. Any slowdown in the U.S. economy can soften the demand for their services.

Nifty IT Index slumped by 1.92%, thereby becoming the biggest loser of the day. As per the investors, higher tariffs and uncertainty in global trade could act as a stumbling block for the outsourcing of tech services. This can affect major IT companies including TCS, Infosys, and Wipro.

3. FII Outflows

Foreign Institutional Investors (FIIs) have been on a selling spree for more than four months. Since October, they have dumped Indian equities worth $26 billion from Indian markets. On March 3, FIIs sold shares worth ₹47.88 billion ($548.29 million).

Heightened FII outflows have remained a cause of concern for the equity markets. With looming uncertain global scenarios, investors are diverting their funds towards safer investments options like the U.S. bonds and golds.