Sensex Crashes 1,400 Points, Nifty Below 22,150 as Global Trade Fears Rattle Markets

Stock Market Plunges Amid Renewed Trade War Concerns and Economic Uncertainty

Indian stock markets experienced a steep selloff on February 28, with the Sensex nosediving 1,400 points and the Nifty dropping below 22,150, as global trade war fears and economic slowdown concerns weighed heavily on investor sentiment. The broader markets were hit even harder, with the BSE Midcap and BSE Smallcap indices falling nearly 3% each, extending their recent underperformance.

The sharp decline was fueled by US President Donald Trump’s aggressive tariff stance, continued foreign institutional investor (FII) outflows, and worries about global economic growth. Market analysts noted that mid-cap and small-cap stocks suffered the worst losses, with several individual stocks seeing steep double-digit declines.

Trump’s New Tariff Announcements Trigger Global Selloff

The latest market rout follows Trump’s announcement on February 27 of additional tariffs on imports from Mexico, Canada, and China:

• 25% tariffs on Mexican and Canadian goods, effective March 4.
• An additional 10% duty on Chinese imports, stacking onto the existing 10% tariff imposed earlier in February, effectively raising total duties on Chinese goods to 20%.

These new trade measures, justified by Trump as part of his crackdown on the flow of deadly drugs into the U.S., have intensified global trade tensions and sparked a sharp selloff in financial markets worldwide.

Market Overview: Nifty and Sensex Face Heavy Selling Pressure

By 1:40 PM, the Sensex had tumbled 1,400 points (1.9%) to 73,201, while the Nifty shed 430 points (1.9%) to 22,115.

• Market breadth was overwhelmingly negative, with just 210 stocks advancing, while
• 2,393 stocks declined, reflecting the severity of the selloff.

The Indian stock market is now on track for its fifth consecutive month of losses, marking its longest losing streak in nearly three decades.

Factors Driving the Market Decline

1. FII Outflows Continue Unabated

• Foreign institutional investors (FIIs) have aggressively offloaded Indian equities, selling stocks worth Rs 47,349 crore in February alone.
• Domestic institutional investors (DIIs) have stepped in as buyers, purchasing stocks worth Rs 52,544 crore, but their support has not been enough to prevent the market from sliding.

2. Weak Global Economic Cues

• Rising U.S. jobless claims and slowing economic activity in the world’s largest economy have heightened concerns about a broader global downturn.
• Wall Street closed sharply lower on February 27, with tech stocks leading the decline, followed by a weak start in European and Asia-Pacific markets.

3. High Valuations and Profit Booking in Mid and Small-Cap Stocks

• Kunal Rambhia, Fund Manager at The Streets, pointed out that India’s mid-cap and small-cap stocks had become overheated, prompting investors to book profits.
• He recommends focusing on fundamentally strong stocks trading at deep discounts, as they could provide attractive long-term buying opportunities.

Sectoral Impact: IT and Financial Stocks Lead the Decline

1. IT Stocks Face Heavy Selling

The Nifty IT index plunged 4%, as fears of a slowing U.S. economy and weaker-than-expected IT spending hit investor confidence.

• Wipro (-6%), Tech Mahindra (-5%), and Infosys (-4%) were among the worst performers.

2. Banking and Financial Stocks Under Pressure

• The Nifty Bank index slipped 0.5%, with 10 out of 12 banking stocks trading in the red.
• IndusInd Bank (-5%) and HDFC Bank (-2%) were among the major laggards.

3. Broader Market Selloff

• Nifty Auto, Nifty PSU Bank, and Nifty Media indices dropped between 3-4%.
• Titan (-6%), Mahindra & Mahindra (-5%), and Hindalco (-5%) were among the biggest losers in the Nifty 50.
• On the positive side, Shriram Finance (+2%), HDFC Bank (+1%), and Coal India (+1%) managed to hold gains.

Stock-Specific Action: Lock-In Expiry and F&O Debut Weigh on Stocks

• Premier Energies plunged nearly 6% after its six-month shareholding lock-in period expired, leading to increased selling pressure.
• IREDA shares slumped over 7% following their debut in the Futures & Options (F&O) segment at the start of the March series.

Market Experts Weigh In on the Outlook

1. Volatility Expected to Persist

• V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that markets dislike uncertainty, and Trump’s tariff threats have injected more volatility.
• However, he believes Indian markets could recover in March, as macroeconomic data improves and FII outflows slow down.

2. Tactical Stock Picking is Key

• Kunal Rambhia advises investors to be selective in their stock choices, particularly in the mid-cap and small-cap segments, where valuations have been stretched.
• He suggests focusing on companies with strong fundamentals and significant upside potential in the medium term.

Global Markets React Negatively to Tariff Developments

• Wall Street ended sharply lower on February 27, as disappointing economic data and tech-sector weakness dragged indices lower.
• European markets opened in the red, rattled by Trump’s renewed tariff threats against the EU.
• Asia-Pacific markets followed suit, tumbling as concerns over a full-scale global trade war resurfaced.

Outlook: Investors Brace for More Market Volatility

With the Indian GDP data scheduled for release today, investors are closely watching for signs of resilience in the domestic economy that could help stabilize market sentiment.

While the short-term outlook remains clouded by global trade tensions and FII outflows, experts believe that long-term investors should focus on quality stocks with strong fundamentals to navigate the ongoing volatility.