Sensex Plunges Over 1,400 Points, Nifty Below 23,000 Amid Trump 2.0 Concerns, Weak Q3 Results
Market Plunge
Benchmark indices Sensex and Nifty tumbled on Tuesday, declining by up to 1%, as investor sentiment was negatively impacted by various global and domestic factors. These included U.S. President Donald Trump’s tariff threats targeting BRICS nations, weak Q3 earnings, and persistent foreign institutional investor (FII) selling. Realty and consumer durable stocks led the market fall.
The BSE Sensex dropped 935.61 points, or 1.21%, to 76,137.83, while the NSE Nifty shed 233.65 points, or 1%, to 23,111.10. The volatility in global markets and mixed earnings reports contributed to the bearish mood, with the India VIX rising over 5% during the session.
Key Factors Behind the Market Decline
- Trump’s Tariff Threats on BRICS Nations: President Donald Trump's remarks targeting BRICS countries rattled investors. On Monday, Trump reiterated his intention to impose 100% tariffs on nations reducing their reliance on the US dollar for global trade. He warned that BRICS nations will face a 100% tariff if they continue their de-dollarization efforts. India, a key member of BRICS, is particularly vulnerable to this development. Trump also announced plans to impose 25% tariffs on imports from Canada and Mexico starting February, heightening concerns over global trade disruptions. According to Prashant Tapse, Senior Vice President of Research at Mehta Equities, Trump’s tariff decisions are a "wildcard for Indian markets."
- Weak Q3 Earnings: Mixed corporate earnings also contributed to market jitters. Shares of Dixon Technologies plunged 14% after reporting a sequential decline in consolidated net profit and revenue for the December quarter. Similarly, Zomato tumbled 9% after its Q3 results revealed that Blinkit’s aggressive expansion was impacting profitability. From the realty sector, Oberoi Realty slipped 7.6% after posting numbers below market expectations.
- Bank of Japan Rate Hike Expectations: Global markets were also unnerved by expectations of an interest rate hike by the Bank of Japan (BOJ) on Friday. Such a move by the BOJ, which would be its first hike since July of last year, could impact borrowing costs globally.
FII Outflows and Budget Uncertainty
Persistent FII outflows continued to weigh heavily on Indian equities. The upcoming Union Budget has further heightened uncertainty, causing investors to adopt a cautious wait-and-watch approach ahead of potential policy announcements. According to Ruchit Jain, Vice President at Motilal Oswal Financial Services, the India VIX has risen over 5% due to increased uncertainty ahead of the Union Budget, and ongoing FII selling remains a primary reason for the market’s decline.
Major Laggards
Major laggards in the 30-share Sensex pack included Zomato, Adani Ports, Kotak Mahindra Bank, Reliance Industries, NTPC, State Bank of India, ICICI Bank, and Bharti Airtel.
Technical Outlook
Anand James, Chief Market Strategist at Geojit Financial Services, noted that while 23,140 held downsides as expected, upswings failed to breach the 23370/90 resistance. He said 23370/90 remains the level to beat, and the 23550-640 objectives continue to be in play. For momentum to persist, he added, it's crucial to stay above 23330 early in the day. Otherwise, a slip to 23268/48 could occur.
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