Top Factors Behind the Decline of the Indian Stock Market
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Synopsis
The Indian stock market showed a steep decline influenced by multiple factors such as US trade policy uncertainty, foreign fund outflows, and weak global cues. The recent tariff announcement by President Trump has also raised concerns about escalating trade wars.
Key Takeaways
- Significant decline in Indian stock indices.
- Trump's tariff announcement causing global trade war fears.
- Upcoming FOMC meeting contributing to caution.
- Weak earnings reports affecting investor confidence.
- Global market trends showing mixed sentiments.
Mumbai, Jan 27 (NationPress) The Indian stock market experienced a significant decline on Monday as the primary indices encountered substantial selling pressure due to unfavorable global indicators, uncertainty surrounding US trade policies, and ongoing foreign fund withdrawals.
A key factor behind this decline was the declaration by US President Donald Trump of a 25 percent tariff on all goods from Colombia entering the United States.
This action, taken in response to Colombia's decision to halt US military deportation flights, has heightened fears of a potential escalation in global trade wars.
Furthermore, the upcoming Federal Open Market Committee (FOMC) meeting, scheduled for January 28-29, has added to the cautious sentiment.
Analysts expect the Federal Reserve to likely keep interest rates unchanged at this meeting, but there is increasing speculation about potential rate cuts in March due to concerns regarding Trump's economic policies, which include prolonged tax cuts and tariffs.
The continuing outflows from foreign funds and disappointing third-quarter earnings from Indian firms have further weakened investor confidence.
Additionally, worries over Chinese DeepSeek's cost-effective AI model disrupting the operations of tech giants like Nvidia and Google have compounded the uncertainty.
Global markets offered minimal support, with US stock futures trading lower during Asian trading hours. The S&P 500 futures fell by 1 percent, while Nasdaq 100 futures declined by 1.9 percent.
Asian markets displayed mixed sentiments. While Hong Kong's Hang Seng Tech Index increased by 2 percent, Japan's Nikkei 225 futures dropped by 0.6 percent.
Shares of Nvidia supplier Advantest Corporation fell by 8.6 percent in Tokyo, and SoftBank Group shares decreased by 5.4 percent.
The BSE Sensex plummeted by 842.4 points, or 1.1 percent, reaching an intraday low of 75,348.06, while the NSE Nifty fell by 265.35 points, or 1.14 percent, breaching the 22,850 mark and hitting 22,826.85.
Although the indices saw a slight recovery later in the session, they remained in negative territory, with the Sensex down by 772 points and the Nifty down by 249 points around 2:30 p.m.
