Mumbai, March 4, 2025 – The Indian stock market witnessed a volatile trading session on Tuesday, with benchmark indices Sensex and Nifty closing in the red amid escalating global trade tensions and persistent foreign portfolio investor (FPI) outflows. The Sensex ended 96 points lower at 72,990, while the Nifty slipped 37 points to settle below the 22,100 mark at 22,083. This marks the 10th consecutive session of losses for the Nifty, its longest losing streak in nearly three decades.
The market sentiment remained subdued as investors grappled with the ripple effects of U.S. President Donald Trump’s decision to impose fresh tariffs on imports from Canada, Mexico, and China. The tariffs, which came into effect earlier today, have sparked fears of a global trade war, leading to a sell-off in Asian and European markets. The Indian market, already reeling under relentless FPI selling, mirrored the global downturn.
Global Trade Tensions Weigh on Markets
President Trump’s announcement of a 25% tariff on imports from Canada and Mexico, coupled with a 10% duty on Chinese goods (bringing the total tariff to 20%), has sent shockwaves across global markets. The move, aimed at protecting U.S. businesses and reducing trade imbalances, has been met with warnings of retaliation from affected countries. Analysts fear that higher tariffs could spur inflation in the U.S., leading to prolonged high-interest rates and further dampening investor sentiment in emerging markets like India.
The Dow Jones Industrial Average fell 400 points in early trading, while the S&P 500 and Nasdaq also declined sharply. European markets followed suit, with the STOXX Europe 600 Automobiles and Parts index plunging 5%, its steepest drop since September 2022. Automakers such as Volkswagen, Stellantis, and BMW, which have significant manufacturing operations in Mexico, were among the hardest hit.
FPI Outflows Continue to Haunt Indian Markets
The Indian market has been grappling with relentless FPI selling since October 2024, with outflows crossing 26billion.OnMondayalone,FPIssoldsharesworthRs4,788crore(26billion.OnMondayalone,FPIssoldsharesworthRs4,788crore(548 million). The exodus of foreign capital has weighed heavily on Indian equities, with the Nifty correcting nearly 16% from its September 2024 highs.
“The market is likely to remain under pressure in the near term due to continued FPI selling, global trade tensions, and a lack of domestic triggers,” said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. “Investors should focus on quality stocks in sectors like banking, financial services, FMCG, and metals, while maintaining a balanced portfolio of large-cap and mid-small-cap stocks.”
Sectoral Performance: IT and Auto Drag, Metals Shine
The Nifty IT index fell over 1% as global trade tensions raised concerns about the sector’s growth prospects. Heavyweights like Infosys and TCS were among the top losers. The auto sector also faced headwinds, with the Nifty Auto index declining 0.8% amid fears of higher input costs due to tariffs.
On the flip side, the metals sector bucked the trend, with stocks like Tata Steel and Hindalco gaining ground. Analysts attributed the rally to rising global commodity prices and expectations of increased demand from China, which announced additional tariffs on U.S. products effective March 10.
Stock-Specific Moves
- SBI and Zomato Defy Market Sentiment: State Bank of India (SBI) and Zomato were among the few stocks that managed to trade higher despite the overall market weakness. SBI gained 1.5% on reports of strong loan growth, while Zomato rose 2% after announcing a partnership with a leading global food delivery platform.
- RBL Bank Slumps 3%: Shares of RBL Bank fell 3% after GST officials conducted searches at three of its offices in Maharashtra. The bank did not disclose details of the alleged violations or their potential impact on its financials.
- ASK Automotive Hits Upper Circuit: ASK Automotive surged 5% to hit the upper circuit limit after the company announced plans to expand its manufacturing capacity.
Rupee and Gold: Safe-Haven Demand Rises
The Indian rupee depreciated by 8 paise to close at 87.40 against the U.S. dollar, reflecting the risk-off sentiment in global markets. Meanwhile, gold prices surged by Rs 1,100 to reclaim the Rs 89,000 mark per 10 grams in the national capital. The rally in gold prices was driven by increased safe-haven demand amid escalating trade tensions and a weaker dollar.
NSE Changes F&O Expiry Days
In a significant development, the National Stock Exchange (NSE) announced changes to the expiry days for futures and options (F&O) contracts. Effective April 4, 2025, the expiry day for Nifty, Bank Nifty, FinNifty, Nifty Next 50, and Nifty Midcap Select will be moved from Thursday to Monday. The move is aimed at aligning Indian markets with global practices and reducing volatility during expiry days.
Expert Views: Is the Market Nearing a Bottom?
Despite the prolonged sell-off, some analysts believe the market is nearing a medium-term bottom. “The Nifty’s 16% correction from its September highs is the sixth-largest since the 2008-09 recession. Historical patterns, technical indicators, and sectoral valuations suggest that the market is approaching a bottom,” said an Axis Securities note. The brokerage advised investors to consider allocating long-term funds in the 21,700-22,000 range.
However, market veterans caution that the road to recovery could be long and bumpy. “The bleeding may end soon, but the repair of investor confidence could take another 3-4 months. The healing process might extend to 6-9 months,” said Samir Arora, Founder and CIO of Helios Capital.
What Should Investors Do?
In a falling market, investors are advised to focus on quality stocks with strong fundamentals and avoid speculative bets. Sectors like banking, FMCG, and metals are expected to outperform in the medium term. Additionally, investors should maintain a balanced portfolio with a mix of large-cap and mid-small-cap stocks to mitigate risks.
“Volatility is an inherent part of equity markets. Investors should brace for choppy weather and focus on long-term wealth creation rather than short-term gains,” said Nilesh Shah, Managing Director of Kotak Mutual Fund.
Conclusion
The Indian stock market remains in a precarious position, caught between global trade tensions and domestic headwinds. While the near-term outlook appears challenging, long-term investors can use the current correction as an opportunity to accumulate quality stocks at attractive valuations. As the market navigates through these turbulent times, patience and discipline will be key to weathering the storm.
Key Takeaways:
- Sensex fell 96 points to 72,990; Nifty slipped 37 points to 22,083.
- Global trade tensions and FPI outflows weigh on market sentiment.
- IT and auto sectors drag, while metals and select stocks like SBI and Zomato outperform.
- Gold prices surge on safe-haven demand; rupee depreciates to 87.40 against the dollar.
- NSE changes F&O expiry days to Monday, effective April 4, 2025.
- Analysts suggest focusing on quality stocks and maintaining a balanced portfolio.