Stock Market Crash: Indices Plunge as Trump’s Tariff Threats, FII Selling, and Weak Rupee Weigh on Sentiment.

Weak global cues and growing concerns over US President Donald Trump’s reciprocal tariff threats led Sensex and Nifty to fall over 1% in early Monday trading. Persistent selling by foreign institutional investors (FIIs) further pressured market sentiment, intensifying domestic economic worries.

Sensex dropped 807.67 points to reach an intraday low of 74,503.39, while the broader NSE Nifty declined 247.55 points to 22,548.35. All 13 major sectoral indices traded in the red, with IT and financial stocks experiencing significant losses. The Nifty Pharma index was the sole gainer, rising by nearly 0.5%.

Key Reason for Stock Market Fall

Heavy FII Selling

Since October last year, foreign investors have been offloading Indian stocks due to rising US bond yields and a strengthening dollar, fueled by diminishing hopes of an imminent Fed rate cut.

By February 10, foreign institutional investors (FIIs) had withdrawn ₹12,643 crore from the cash segment of Indian equities. Their total outflow from the Indian stock market since October has exceeded ₹2.75 lakh crore.

Fears of trade restrictions

US President Donald Trump has introduced multiple tariffs on trade partners, heightening fears of a wider trade conflict that could hinder global economic growth and increase inflation.

He enforced a 25% tariff on steel and aluminum imports, with Canada and Mexico expected to bear the most impact.

The uncertainty surrounding these US tariffs and their potential effects on global economic stability has made investors more cautious about riskier equities.

Rupees Weakness

The depreciation of the rupee against the US dollar has been a major factor driving aggressive foreign capital outflows and dampening market sentiment. On Monday, the domestic currency neared the 88 mark, having declined nearly 3% against the dollar this year.

The recent steep drop in the rupee is largely due to the dollar’s strength, fueled by fears of a trade war that could lead to prolonged economic disruption.

Concerns Over Slowing US Growth

On Friday, US markets closed lower as economic data indicated a slowdown in business activity and a decline in consumer confidence. Survey results revealed that business activity in the US had dropped to a 17-month low, highlighting rising concerns about economic uncertainty. Investor anxiety deepened as Walmart’s disappointing earnings forecast intensified fears of weakening consumer demand.