Sensex Crashes 1,200 Points, Nifty Falls Below 23,000: Reasons Behind Market Sell-Off

Stock Market Crash Today: Trump Tariffs, FII Selling, and Rupee Weakness Weigh on Sensex & Nifty

The Indian stock market witnessed a sharp sell-off on Tuesday, with the Sensex tumbling 1,200 points and the Nifty 50 slipping below the 23,000 mark. This marks the fifth consecutive session of losses, driven by intensifying US trade tensions, heavy foreign institutional investor (FII) selling, and continued rupee depreciation.

Highlights of the Market Crash

• Sensex declined by 1,200 points (1.5%) to 76,100, while Nifty 50 fell by 350 points (1.5%), slipping below 23,000.
• BSE Midcap index slumped 3.1% and BSE Smallcap index plunged 3.5%, indicating broad-based selling.
• US President Donald Trump’s tariffs on steel and aluminum reignited global trade war concerns.
• Rupee hit a record low of ₹88 per US dollar, leading to increased FII outflows.
• FII selling intensified, with outflows surpassing ₹12,643 crore in February, following a massive ₹87,374 crore sell-off in January.
• Weak Q3 earnings from Eicher Motors and Escorts Kubota dampened investor sentiment.

Top Reasons Behind Sensex and Nifty Sell-Off

1. Trump’s Tariff Hike Triggers Global Trade War Fears

• US President Donald Trump announced fresh tariffs on steel and aluminum imports, rattling global financial markets.
• Aluminum tariffs were raised from 10% to 25%, while a 25% duty on steel imports was reinstated.
• Key US trading partners like Canada, Mexico, and Brazil lost tariff exemptions, creating uncertainty in global trade.
• Asian and European stock markets also reacted negatively, fearing economic slowdown due to rising trade barriers.

2. FII Selling Intensifies Amid Rupee Depreciation

• Foreign institutional investors (FIIs) offloaded over ₹12,643 crore in February, following a record ₹87,374 crore outflow in January.
• The Indian rupee hit an all-time low of ₹88 per US dollar, intensifying FII outflows.
• RBI intervened to support the rupee, helping it recover to ₹87.79, but overall sentiment remains weak.

3. Weak Q3 Earnings Hurt Investor Confidence

• Eicher Motors shares plunged 7% after the company missed Q3 profit and margin estimates, citing rising costs and declining premium motorcycle sales.
• Escorts Kubota stock fell 5.3% after reporting weaker-than-expected Q3FY25 earnings and a subdued outlook for upcoming quarters.
• Poor corporate earnings outlook has further dampened investor sentiment.

4. Midcap & Smallcap Stocks Under Pressure

• Broader market sell-off was severe, with the BSE Midcap index dropping 3.1% and BSE Smallcap index falling 3.5%.
• ICICI Prudential AMC’s CIO S Naren warned investors about ‘absurd valuations’ in midcap and smallcap stocks, urging them to be cautious.
• Retail and domestic investors are advised to stay selective in their investments amid high volatility.

5. Global Market Weakness Adds to Selling Pressure

• Asian stock markets fell, with Hong Kong’s Hang Seng index down 0.3% and S&P 500 futures declining 0.2%.
• European markets opened lower, reflecting growing concerns over US trade policies and economic slowdown.
• Gold prices surged, indicating increased investor preference for safe-haven assets amid rising market uncertainty.

Stock Market Outlook: What’s Next for Sensex and Nifty?

• Experts believe large-cap stocks in banking, IT, autos, pharma, and capital goods may offer stability amid ongoing volatility.
• V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that while Sensex and Nifty large-cap stocks are now fairly valued, midcap and smallcap stocks remain overvalued.
• Investors should focus on fundamentally strong stocks and monitor global trade developments for further market direction.