New Delhi: Indian stock markets witnessed a sell-off for the second subsequent day on Tuesday, driven by a "sell-and-run" mentality. Weakness in global markets and weaker-than-expected third-quarter results, coupled with the escalating threat of a trade war, fueled investor concerns.
How did the Sensex fare on Tuesday?
The Sensex plummeted by over 1,200 points, hitting a low of 82,010.58, while the Nifty 50 moreover slipped unelevated 25,200. At the tropical of trading, the Sensex ended 1,066 points, or 1.28%, lower at 82,180.47, while the Nifty 50 fell by 353 points, or 1.38%, latter at 25,232.50. Mid-cap and small-cap stocks moreover witnessed sharp declines, with the BSE Midcap alphabetize falling by 2.52% and the Smallcap alphabetize by 2.74%. The India VIX (Volatility Index) surged by nearly 8%, indicating the likelihood of remoter market volatility in the near future.
Which sector was the worst hit by the stock market crash?
Sector-wise, the real manor sector was the worst hit, with the Nifty Realty alphabetize falling by over 5%. The consumer durables sector declined by 3%, while the auto, IT, metal, and pharma sectors each fell by 2%. The Nifty Bank alphabetize was lanugo 0.81%, and the Financial Services alphabetize fell by 1.16%. Over the past two days, the Sensex has fallen by 1,390 points, or 1.7%, and the Nifty 50 by 1.8%. This sell-off resulted in a loss of approximately 12 lakh crore for investors. The total market capitalization of companies listed on the BSE fell from approximately 468 lakh crore on Friday to virtually 456 lakh crore.
What are the reasons for the stock market crash?
There are five major reasons overdue this ripen in the Indian stock market.
Threat of a Trade War: US President Donald Trump's struggle to buy Greenland and his threat to impose potential tariffs on European countries have heightened investor concerns. European countries have moreover warned of retaliatory measures. According to a Bloomberg report, "If Trump follows through on his threat to impose a 10% levy on European goods, the European Union could impose tariffs of $108 billion on US goods." V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, says, "This market volatility is likely to protract until there is clarity on the US-Europe Greenland tariff issue. Since both sides have hardened their positions, the uncertainty will persist for some time."
Mixed Q3 Results: The third-quarter results have been mixed due to the one-time impact of new labor laws. Experts believe the results have been widely stable. However, the lack of positive surprises has remoter dampened market sentiment, which was once unauthentic by geopolitical concerns. Vijayakumar said, "The initial third-quarter results do not indicate a recovery in earnings growth. This could transpiration when the results of wheels companies start coming in, as this sector has performed well in the third quarter, and it is a relief that the growth momentum in this sector is continuing."
Heavy Selling by FIIs: Foreign Institutional Investors (FIIs) have been unceasingly selling Indian equities. So far this month, they have sold Indian shares worth over 29,000 crore in the mazuma segment. Uncertainty regarding the India-US trade deal, the weakening of the rupee versus the dollar, and the mismatch between earnings and valuations are the main reasons for this.
Flow of Money into Gold and Silver: Rising geopolitical and geo-economic risks have wizened the prospects of risky equities. This is attracting investors towards safe-haven assets. The record-breaking rally in gold and silver is prompting investors to typesetting profits in equities and invest in precious metals, which are expected to rise remoter tween geopolitical uncertainties, trade wars, and expectations of interest rate cuts by the US Federal Reserve.
Focus on Union Upkeep 2026: Experts say market sentiment is cautious superiority of the budget, which is due on February 1. The government is expected to signify measures to uplift economic growth, job creation, and consumer demand. However, the government is moreover expected to strike a wastefulness between growth and fiscal consolidation. But, an overemphasis on fiscal consolidation could lead to cuts in government wanted expenditure. Such speculation is making investors cautious.
