The stock market experienced a sharp decline on Monday, with the Sensex and Nifty falling by nearly 1%. Investor sentiment was hit hard by concerns over global trade tensions after former US President Donald Trump warned of new tariffs. Additionally, the rupee’s depreciation to an all-time low added to market jitters, leading to a significant erosion of investor wealth—nearly ₹6 lakh crore.
The BSE Sensex was down 704.40 points (0.90%) at 77,155.79, while the NSE Nifty50 dropped 226.90 points (0.96%) to 23,333.05 as of 2:20 PM. Metal stocks bore the brunt of the sell-off following Trump’s announcement of a 25% tariff on all steel and aluminum imports. These tariffs, set to be implemented almost immediately, rattled global markets and fueled concerns about a slowdown in trade.
Foreign institutional investors (FIIs) continue to offload their holdings despite recent policy measures, including an RBI rate cut and tax-saving incentives introduced in the Union Budget. Analysts believe that global uncertainties, including a stronger US dollar index (above 108) and rising US bond yields (above 4.4%), are prompting investors to move away from emerging markets, including India.
The rupee weakened to a historic low of 87.95 per US dollar, surpassing its previous record of 87.58 from last week. The currency was last trading at 87.93, down 0.6% for the day, impacted by the broader selloff in Asian currencies. Market analysts expect continued pressure on the rupee due to global trade tensions and persistent FII selling.
The RBI’s recent 25-basis-point repo rate cut was widely anticipated, given the economic slowdown. However, the central bank has maintained a cautious stance, avoiding a shift to an aggressive accommodative policy due to lingering global uncertainties. Analysts at Nuvama Institutional Equities expect further rate cuts in the coming year but stress that they will be implemented cautiously, with global economic risks playing a key role in decision-making.
The ongoing market correction has been significant, with Sensex and Nifty down 10-11% from their all-time highs. Midcap and smallcap indices have seen an even steeper decline of 15% from their 52-week highs, and some individual stocks have plummeted by as much as 50% from their peaks. Despite this correction, analysts caution that valuations in the midcap and smallcap space remain high. They suggest that investors focus on stable large-cap stocks with reasonable valuations for long-term stability.
Meanwhile, Meta Platforms has begun a new round of layoffs, affecting approximately 5% of its workforce. The company has sent termination notices to employees starting today, with the process expected to continue until February 18 in various regions. The layoffs are reportedly aimed at "low performers," though some positions may be refilled. Employees in Germany, France, Italy, and the Netherlands are exempt due to strict labor regulations.
Meta is also accelerating hiring in machine learning and other high-priority engineering roles. The company has urged employees to support an expedited hiring drive, which will take place between February 11 and March 13.
This wave of tech layoffs extends beyond Meta. Google has introduced a voluntary exit program for employees in its Platforms and Devices division, affecting teams working on Android and Pixel. Microsoft has also increased performance-based layoffs, with some employees being let go without severance or healthcare benefits. Amazon, on the other hand, has cut approximately 200 jobs in its fashion and fitness divisions as part of its effort to streamline operations and enhance efficiency.
Market analysts remain cautious about the near-term outlook. With global economic uncertainty, foreign investor outflows, and corporate cost-cutting measures, the stock market may continue to experience volatility. Experts advise investors to remain cautious, focusing on fundamentally strong stocks and keeping an eye on upcoming economic indicators for further direction.
