Stock Market in India Under Pressure | Sensex Tanks 1,000 Points

At the end of the trade BSE Sensex was fixed at 82,180.47, down by 1,065.71 points or 1.28 percent. The NSE Nifty 50 failed to do any better and plummeted by 353 points to close at 25,232.50. This sharp decline wiped out almost 10 lakh crore of investor wealth within one day, and it was one of the worst trading days for the stock market in India in recent months.

Trump’s Tariffs Spook Global Markets

This may have been caused by domestic factors, but the main trigger to the global risk-off position was out of Washington. President Donald Trump also escalated the effort involving the acquisition of Greenland by the administration to a threat of a 10 percent tariff on goods imported by eight large countries in Europe that were against the action. 

This sudden increase in the rhetoric of the trade once again raised the fears of the world plunging into another global trade war. European and Asian markets were selling red and Wall Street was making its largest drop since October of last year. Since investors were looking to invest in safe-haven assets, the price of gold and silver shot up to new highs, further draining liquidity in such emerging equity markets as India.

Mixed Bag for ITC Hotels and Tata Capital

Going down to the domestic front, the third-quarter (Q3) earnings cycle remained to determine the individual stock performance. Two distinguished organizations ITC Hotels and Tata Capital got acute attention after they published their financial reports.

ITC Hotels have reported an increase in the net profit by 9.6 percent to reach a value of 237 crore in the December quarter, and the revenue generated in operations has increased to more than 1, 230 crore. With these seemingly strong numbers, the stock was under pressure on a downward trend because analysts reported that the performance was slightly below the Forecaster expectations, and investors cashed their gain following a buildup of massive profits ahead of the statement announcement.

Tata Capital on the other hand provided a ray of hope. The Tata Group non-banking financial company (NBFC) recorded a 17% increase in its consolidated net profit, which stands at 1,257 crore and the revenue increased by 12 percent growth, which was fuelled by the continuous growth in its retail and SME divisions. The shares of Tata Capital despite being in a declining market were showing some resilience at first until it finally gave in to the bearish trading environment.

Foreign Investors Keep Selling

The continued selling by Foreign Institutional Investors (FIIs) continues to be a sore issue to the Indian market. Tuesday alone saw the sale of shares by the FIIs to the tune of almost 2938 crore. Though the Domestic Institutional Investors (DIIs) tried to reduce the plummet by purchasing stocks valuing 3,665 crore, this failed to stop the exit.

The woe was compounded by the rupee which hit a record low of 90.97 as compared to the U.S. dollar. A weak currency usually makes imports more expensive and triggers additional capital outflow thus creating a vicious cycle that is harmful to equity markets.

What’s Next for Investors & Stock Market in India?

The market breadth was negative to an overwhelming extent; in the BSE, more than 3,500 stocks were falling whilst only 780 were rising. Some of the high-profile losers were Sun Pharma, LTIMindtree, and Oberoi Realty, which had ended up making large cuts after their own quarterly announcement or industry-wide selling pressure.

Analysts consider the 25, 100 mark to be a crucial support level to the Nifty. In case the index violates this level, the fall might increase to reach faster 24,800. The so-called fear gauge or India VIX has so far increased by over 7, which means that volatility is still high.