Asian stock markets faced sharp declines on February 28, 2025, fueled by growing concerns over trade tariffs announced by U.S. President Donald Trump. The impact was particularly noticeable on the Indian equity markets, with both the BSE Sensex and the Nifty 50 indices witnessing significant drops, leading to investor anxiety and uncertainty.
On Friday, the Nifty 50 index opened at 22,433.40, down 111.65 points or 0.5 percent, shortly before tumbling just under 1.4 percent earlier during the day. The BSE Sensex began at 74,201.77, experiencing a decline of 410.66 points or about 0.55 percent. Amid this turmoil, it was reported by the Economic Times, “The Nifty IT index tumbled over 4% during the intraday trade.” Major players within the IT sector like Mphasis, Tech Mahindra and Wipro fell considerably with Mphasis leading the decline at approximately 5.78%.
Market analysts, including V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the volatility, stating, "The spate of tariff announcements by Trump has been impacting markets..." Investors were apprehensive following Trump’s announcement of imposing 25% tariffs on Canada and Mexico starting March 4, 2025, along with another 10% on China. His aggressive stance raised alarms about potential retaliatory measures from trading partners and initiated fears of a broader trade war.
A broader sell-off was evident as the Nifty Metal sector fell 2.13%, and various sectors including Nifty Auto, Nifty Realty, and Nifty Media also reflected declines of nearly 1.88% across the board. Observing these downturns focused on foreign portfolio investor (FPI) outflows, Vijayakumar noted, “Stock markets dislike uncertainty, and uncertainty has been on the rise ever since Trump was elected the US president.”
Market sentiment has remained weak as concerns surrounding economic growth and corporate earnings mounted, leading to what has been termed the longest current losing streak on the Nifty, which has now fallen for several successive trading sessions. Bloomberg reported the total drop was so severe it wiped out Rs 8 lakh crore of market capital.
International influences compounded these issues, with platforms like the Nikkei 225 falling 3.3 percent and Hong Kong’s Hang Seng Index declining 2.31 percent. The KOSPI index of South Korea also dropped over 3 percent. These markets fell sharply, aligning with the general bearish sentiment and reflecting broad weakness attributed to Trump’s trade announcements.
Yeap Jun Rong, IG market strategist, reiterated the potential ramifications of these tariffs: "Any implementation of tariffs may pose downside risks to global growth..." This highlights concerns Saturday morning as traders readjusted for anticipated higher business costs and inflation, which could dampen consumer spending across global markets.
Despite the turmoil, it's noteworthy to mention the resilience of certain domestic investors who continued to buy stocks even as foreign investors withdrew capital, leading to speculation on whether this could provide some support for the Indian markets.
Analysts observed mixed movements within the sectors, with only three stocks showing gains. Coal India emerged as one of the top gainers, distinguishing itself from the rest of the downward trend. Large corporations such as Tata Consultancy Services (TCS) hit the ground hard, dropping to their 52-week low of ₹3,457 apiece which is about 4.3% decline. TCS’s stock has plunged more than 15% over the last month as fears around the trade war circulated heavily.
From the overseas front, the Dow Jones Industrial Average, S&P 500, and Nasdaq all fell sharply the night prior, contributing to the bearish tone observed on global platforms. The anticipated release of GDP figures influenced market belly button gazing, as many investors took pause to reassess their positions.
Market analysts fear this selling spree may not end soon. The technical charts signal areas of significant support and resistance. "Since large-cap valuations are fair, and pockets attractive, FIIs are unlikely to press selling as aggressively during the last few months. Long-term investors can utilize the weakness to slowly accumulate," Vijayakumar mentioned, instilling hope for gradual market stabilization amid the chaos.
Ending the day on February 28, the Nifty IT index faced declines exceeding 4%, and it was noted by ANI, weakness extended to 47 out of 50 Nifty stocks being deep in the red. The overall market decline filtered downwards, leading to selling pressures among retail investors as uncertainty about the future of trade weighs heavily.
Given the continuous fluctuations and political undertones surrounding international tariffs, investors will remain cautious, watching closely how markets react as they await guidance from both economic data and potential policy decisions coming from Washington.
With sustained volatility expected, market players are preparing for what could be extended pullbacks, assessing trade war ramifications amid any legislative framework by the U.S. government moving forward.