₹6 Lakh Crore Market Cap Wiped Out as Global Uncertainty Weighs on Indian Equities
Indian equity markets faced heavy losses on February 28, as Sensex plunged over 1,000 points, while Nifty slipped to a nine-month low, reflecting broader concerns over global trade tensions and economic slowdown fears.
- Sensex fell by 1,009.64 points (-1.35%) to 73,602.79.
- Nifty declined 316.25 points (-1.4%), trading at 22,228.80.
- Market capitalization of BSE-listed firms dropped by ₹6.1 lakh crore.
- Nifty 50 has fallen 5% in February, marking its fifth consecutive month of losses, the longest losing streak in 29 years.
Factors Driving the Market Crash
1) Trade War Fears Escalate After Trump’s Tariff Announcement
Global markets were rattled after U.S. President Donald Trump announced new tariffs on imports from Canada, Mexico, and China, sparking fears of a full-fledged trade war.
- Trump declared that 25% tariffs on imports from Canada and Mexico would take effect from March 4, sooner than the originally planned April 2.
- Additionally, Chinese goods would face an extra 10% duty, increasing concerns about escalating trade tensions.
“Stock markets dislike uncertainty, and Trump’s tariff announcements are adding to global market volatility,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
While a full-blown trade war is yet to be priced in, markets remain on edge, as China’s response to the latest tariffs remains unclear. The CBOE Volatility Index (VIX) spiked to 21.13, signaling rising investor nervousness.
Despite the downturn, Vijayakumar expects Indian markets to stabilize in March, as FII selling subsides and macroeconomic indicators improve.
2) Weakness in Asian Markets Weighs on Sentiment
Asian markets saw a sharp sell-off, tracking Trump’s tariff announcement and concerns over economic slowdown in China.
- Hong Kong’s Hang Seng Index dropped 2.3%, breaking a six-week winning streak.
- China’s CSI300 Index fell 0.8%, while the Shanghai Composite lost 0.9%.
- Japan’s Nikkei Index slipped to a five-month low of 37,084.44, as foreign investors pulled out ¥1.04 trillion ($6.95 billion) from equities, the largest outflow in five months.
Analysts at UBS highlighted that investors are cashing in on tech stock gains, after a 30% rally this year in Hong Kong-listed tech majors.
“With China making rapid strides in AI and robotics, tensions with the U.S. are set to intensify,” warned Ting Lu, Chief China Economist at Nomura.
3) Nvidia Q4 Results Impact Global Tech Stocks
Weak earnings guidance from Nvidia, the world’s largest AI chipmaker, triggered a broad-based decline in technology stocks across global markets.
- Nvidia stock plunged 8.5% overnight, despite strong revenue projections.
- Japan’s Nikkei and Hang Seng indices saw profit booking in chip-related stocks, further weighing on sentiment.
“The market is now using Nvidia’s earnings as a reason to lock in profits from the recent AI-driven tech rally,” noted UBS analysts.
4) U.S. Economic Concerns and Inflation Worries
Recent U.S. economic data showed weekly jobless claims rising more than expected, fueling concerns that the world’s largest economy may be slowing down.
- The IT sector led the decline, with the Nifty IT Index dropping 4%, extending its weekly loss to nearly 8%.
- Rising inflation expectations, fueled by Trump’s tariff policies, have added to market volatility.
What’s Next for Indian Markets?
Market experts believe the current correction presents opportunities for long-term investors.
“Since large-cap valuations are fair and attractive in pockets, FIIs may reduce selling pressure,” Vijayakumar added.
Key Takeaways for Investors:
✔ ₹6.1 lakh crore wiped out from the Indian stock market in a single session.
✔ Sensex plunged over 1,000 points, while Nifty hit a 9-month low.
✔ Trade war fears and weak Asian markets are key drivers of the downturn.
✔ Nvidia’s Q4 results triggered a selloff in global tech stocks.
✔ Indian markets may recover in March, as FII selling slows and valuations turn attractive.
As markets navigate uncertainty, investors should stay cautious, focusing on quality large-cap stocks and defensive sectors.
