Indian benchmark equity indices, Sensex and Nifty50, traded lower for the second consecutive session on Monday, weighed down by concerns over weak corporate earnings, uncertainty surrounding US trade policy, and continued foreign outflows.
The BSE Sensex was trading 763 points, or 1%, lower at 75,434. The Nifty50 was down 240 points, or 1.04%, trading at 22,851 around 11:03 am.
The market capitalization of all listed companies on the BSE dropped by Rs 9.48 lakh crore to Rs 410.03 lakh crore.
Why is the stock market falling today?
1) US policy uncertainty
U.S. President Donald Trump recently announced plans to impose 25% tariffs and sanctions on Colombia after its president barred two U.S. military planes carrying deported migrants from landing. Trump stated that tariffs would be applied "immediately" on all goods from Colombia, with the rate increasing to 50% in one week. However, the tariffs will not be implemented after Colombia agreed to accept deported migrants without restrictions.
Concerns over such policy uncertainty, especially with the possibility of new tariffs on Canada and Mexico starting February 1st, have added pressure on global markets.
“A major concern is that President Trump is introducing new threats, like the 25% tariff on Colombia for refusing to accept deported illegal immigrants. The potential tariffs on Canada and Mexico are weighing on the markets," said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2) Nervousness ahead of Fed rate decision
The upcoming U.S. Federal Reserve rate decision, scheduled for Wednesday, is drawing investor attention. While expectations suggest that the Fed may keep rates unchanged, all eyes are on the commentary, which will provide insights into future rate movements.
The anticipation is heightened by President Trump’s calls for lower borrowing costs, leaving investors on edge about the future trajectory of interest rates.
3) Earnings slowdown
The earnings season has begun on a weak note. According to Bloomberg consensus estimates, Nifty50 companies are expected to see just a 3% year-on-year (YoY) growth in earnings per share (EPS) for Q3. While the capital goods, healthcare, and telecom sectors are expected to show high double-digit profit after tax (PAT) growth, sectors such as metals, chemicals, consumer staples, banks, and oil & gas are likely to lag.
4) Continued FIIs selling
Persistent selling by foreign institutional investors (FIIs) continues to weigh on the market. As of January 24, 2025, FIIs have offloaded Rs 64,156 crore worth of equities, showing no signs of slowing down their selling spree.
5) Dollar strength
Concerns over additional tariffs on the U.S.’s top trading partners, including China, Mexico, and Canada, have caused nervousness in global markets. However, Nomura strategist Naka Matsuzawa believes that the strength of the dollar amid tariff fears will be short-lived.
"As a trend, Trump is adopting a more realistic and less aggressive stance on tariffs," Matsuzawa said.
The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, rose 0.21% to the 107.66 level.
No comments:
Post a Comment