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BSE Sensex and Nifty 50, were trading with deep cuts amid mixed global cues following the inauguration of President Donald Trump.
Stock Market Crash
Indian benchmark equity index, the Sensex, plunged sharply on Tuesday, dragged down by key stocks like RIL, Kotak Bank, and Zomato, as market sentiment turned cautious following US President Donald Trump’s trade tariff announcement on neighboring countries shortly after taking office.
At 9:30 am, the Sensex hit the day’s high of 77,297.72 after opening at opened at 77,261.72 (0.24% higher than the previous close). However, the markets started falling after 9:30 am and the BSE benchmark index plummeted to the day’s low of 76,224,79 at around 10:25 am, recording a fall of 1,072.93 points within an hour in the early trade.
The Sensex had closed at 77,073.44 on Monday.
However, At 11 AM, the BSE Sensex was trading at a low of 756.36 points, or 0.98%, at 76,317.08, and the Nifty 50 was at 23,178.40, lower by 166.35 points, or 0.71%.
Adding to the negative sentiment, all sectors turned red, reversing the positive momentum from the previous session’s strong close. Data from exchanges showed that the market capitalization eroded by ₹4.5 lakh crore in today’s session.
US stock futures had surged globally after Trump’s inauguration, with optimism over potential economic policies, particularly in banking and energy sectors. However, sentiment soured in Asia as Trump’s 25% tariff proposal on Mexico and Canada dampened expectations of a delay, quashing earlier hopes following his inauguration speech.
While the gradual 25% tariff hikes on Mexico and Canada are expected, the dollar and US 10-year bond yields fell slightly. Analysts suggest that any delays in tariff hikes could benefit emerging markets like India. However, consistent FII inflows remain contingent on a revival of India’s GDP growth and corporate earnings.
Traders view the markets as oversold, but believe the current uptrend might only be a temporary bounce rather than a significant shift. Mixed earnings and continued FII selling are keeping sentiment subdued. Analysts suggest that meaningful recovery will depend on sector-wide signals rather than individual stocks.
In the broader market, mid and small-caps mirrored the weak trend, each losing about 1%. Religare Broking’s Ajit Mishra highlighted that mid and small-cap valuations remain stretched above long-term averages, leaving room for further declines. Investors are advised to take a stock-specific approach and focus on strong businesses.
Analysts’ Insights:
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, “Trump’s second term started without much clarity on his economic policies. His inaugural address focused on immigration, but there was vagueness on tariffs. The 25% tariffs on Canada and Mexico suggest a gradual implementation of tariff hikes.”
He added, “The currency market responded with a fall in the dollar index to 108.43 and the 10-year bond yield to 4.54%. This could be a ‘buy on rumors, sell on news’ scenario, and further delays in tariff hikes could weaken the dollar, benefiting emerging markets like India.”
Hardik Matalia of Choice Broking observed, “Nifty could find support at 23,250, followed by 23,100 and 23,000. Resistance is at 23,400, 23,500, and 23,700.”
Global Markets:
Asian markets were mostly flat after Trump’s tariff remarks on Mexico and Canada, which disappointed investors who had been hopeful of a delay. U.S. stock futures pared earlier gains, with Nasdaq futures down 0.08% and S&P 500 futures up a mere 0.07%. European futures also traded lower, with EUROSTOXX 50 futures falling 0.25% and FTSE futures easing 0.02%.
FII/DII Tracker:
Foreign Institutional Investors (FIIs) sold equities worth ₹4,336 crore on January 20, while Domestic Institutional Investors (DIIs) bought equities worth ₹4,322 crore on the same day.
Oil Prices:
Oil prices slipped in early Asian trading on Tuesday following Trump’s announcement of plans to boost U.S. oil and gas production. Brent crude futures dropped by 11 cents to $80.04 per barrel, and West Texas Intermediate crude fell 67 cents to $76.72 per barrel.
Rupee vs Dollar:
The Indian rupee strengthened by 17 paise to 86.28 against the US dollar, amid fluctuations in the US dollar due to Trump’s tariff announcements. The dollar index fell 0.93% to 108.33.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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