Benchmark stock market indices experienced significant turbulence on Monday, closing in the red after a day of heightened volatility. The S&P BSE Sensex dropped by 319.22 points, finishing at 77,186.74, while the NSE Nifty50 fell by 128.85 points to close at 23,353.30. The morning session was particularly grim, with the indices plunging nearly 1%, resulting in a massive loss of Rs 5 lakh crore in investor wealth. At one point, the Sensex saw a drop of almost 750 points. However, despite the early pressure, the markets saw a partial recovery during the afternoon session, with the indices managing to close down by only 0.5%.
Investor sentiment was particularly shaken by two major factors—concerns over the ongoing tariff war and the rapid depreciation of the Indian rupee. The global trade tensions, especially between the US and other nations, have been a key driver of market volatility. Experts believe that the tariff conflicts will only serve to hurt global economic growth, leading to heightened financial risks. According to Vinod Nair, Head of Research at Geojit Financial Services, the protectionist policies emerging from the trade war could undermine the global trade framework that had flourished under globalization. As a result, countries may experience increased inflation and rising interest rates, further complicating economic stability. The prolonged uncertainty is bound to affect the global economy, making it more challenging for countries to navigate their financial policies without significant risks.
Another crucial trigger for the market decline was the weakening of the Indian rupee. On Monday, the rupee hit a record low of 87.17 against the US dollar, which raised concerns about India’s economic stability. The ongoing depreciation of the currency has put considerable pressure on foreign investors, further eroding their confidence in India’s financial markets. The rupee’s slide has raised red flags among investors, especially as India faces an increasingly difficult economic environment exacerbated by global uncertainties.
The outflows from foreign institutional investors (FIIs) have also been worrying. The month of January 2024 saw the second-highest FII offloading in recent history, with outflows totaling Rs 87,374.66 crore, just behind the record Rs 114,445.89 crore offload in October 2024. In the early part of February 2025, the selling momentum has shown no signs of abating, with FIIs selling Rs 1,327.09 crore worth of stocks while purchasing only Rs 165.26 crore. This sustained selling activity reflects growing concerns over the risks in the Indian market, especially considering the high stock valuations and the global trade and policy uncertainties.
Despite the overall market decline, certain stocks managed to buck the trend and post gains. Bajaj Finance emerged as the top gainer on the Nifty50, rising by 4.47%, followed by Mahindra & Mahindra, which gained 2.91%. IT major Wipro added 2.84%, while telecom giant Bharti Airtel increased by 2.03%. Two-wheeler manufacturer Eicher Motors also saw a positive trend, gaining 1.93%. These gains were primarily driven by strong performance in the financial and technology sectors, which managed to hold up despite the overall market downturn.
On the flip side, the market's losers were concentrated in sectors such as infrastructure, energy, and metals. Larsen & Toubro, one of the country’s largest infrastructure companies, saw the steepest decline, shedding 4.68% of its value. Oil and Natural Gas Corporation (ONGC) lost 4.31%, and Bharat Electronics Limited (BEL) saw a decline of 3.78%. Other major losers included Bharat Petroleum Corporation, which fell 3.38%, and Hero MotoCorp, which lost 3.32% of its value. The sell-off in these stocks reflects the ongoing concerns about the challenges facing these sectors in the current market environment.
From a technical analysis perspective, market experts like VLA Ambala of Stock Market Today have recommended a cautious approach. According to Ambala, while Nifty50 has formed a bullish pin bar pattern in the most recent session, it still remains far from key support levels, suggesting that the index may face further pressure before it can stabilize. In light of these conditions, Ambala advocates for a “sell-on-rise” strategy, encouraging traders to take advantage of any upward movements to liquidate positions and reduce exposure in anticipation of further market turbulence.
The broader market outlook remains cautious as global economic risks continue to loom large. The ongoing tariff wars, rising inflation, and currency fluctuations are all contributing to an increasingly complex environment for investors. Furthermore, domestic factors like high stock valuations and the uncertainty around foreign investment flows add additional layers of complexity to the situation. With little clarity on how long the tariff conflicts and currency depreciation will persist, the markets may face continued pressure in the short term.
For now, it appears that investors will need to navigate a landscape shaped by rising geopolitical risks, trade uncertainties, and a weakening currency. While some sectors may continue to perform well, the broader market sentiment remains fragile, and further volatility cannot be ruled out. As global trade dynamics evolve and domestic economic conditions fluctuate, market participants will need to be vigilant and ready to adjust their strategies in response to an unpredictable financial environment.
