The Indian stock markets faced severe headwinds on February 11, 2025, as investor sentiment soured following the announcement of fresh tariffs by US President Donald Trump. The S&P BSE SENSEX plunged by 1,018.20 points, or 1.32%, closing at 76,293.60. The National Stock Exchange’s NIFTY50 index didn’t fare anybetter, losing 309.80 points, also down by 1.32%, to finish at 23,071.80.
The declines were not just minor blips; they signaled deep-rooted concerns among market participants over the ramifications of Trump's tariff policies. Earlier, during intraday trade, SENSEX had hit lows of 76,184.18, bringing its losses to 1,127.62 points, or 1.46%. Similarly, the NIFTY50 dropped as low as 23,032.10, down 349.50 points, or 1.49%.
Investors were rattled, especially with Trump announcing stricter 25% tariffs on steel and aluminum imports—effective from March 4—which would be applied without exceptions to all countries, including Canada and Brazil. This move is part of Trump’s strategy to boost US industries, yet it risks igniting broader trade tensions globally.
"The tariff hike by US President Donald Trump... is raising worries for the investors," echoed market analysts, reflecting the widespread anxiety about potential retaliatory measures from affected countries. The European Union has already vowed to respond, creating more uncertain terrain for international trade.
Domestic responses were immediate, with Indian markets reacting sharply. The broader BSE Midcap and Smallcap indices also showed distress, losing more than 3%. Stocks like Zomato, Tata Motors, and Power Grid faced declines of up to 5%. "The entire SENSEX basket was trading in the red," pointed out analysts who noted no sign of recovery during the trading day.
According to recent data, Foreign Institutional Investors (FIIs) also contributed to the market’s downtrend, selling equities worth ₹2,463.72 crore on February 10. The persistent offloading by FIIs—who have sold approximately ₹85,841 crore worth of equities since the beginning of 2025—has compounded concerns about the stability of the Indian market.
The repercussions of Trump’s tariffs extend beyond immediate losses. Nomura’s research highlighted how such reciprocal tariffs could inflict damage on India and other developing Asian economies significantly more than their developed counterparts. With the US being India’s largest export destination—accounting for roughly 18% of total exports—there are genuine fears the tariffs could weigh down economic growth. India’s trade surplus with the US, which reached nearly $38 billion last year, could also dwindle if export markets begin to dry up.
This market crash marks the fifth consecutive decline for domestic equities, with broader declines bringing the midcap index down around 17% from its peaks. Stocks of companies such as Eicher Motors and Apollo Hospitals also fell sharply post their quarterly earnings reports, emphasizing the fragile nature of sentiment amid muted economic forecasts.
"FIIs would wait for the local currency to stabilize before committing any significant investments. Therefore, their selling may continue till March 2025," asserted Chokkalingam G., Founder of Equinomics Research Pvt Ltd, highlighting the potential for sustained downward pressure on stocks.
With Trump’s revelations likely stirring inflationary pressures within the US, analysts are wary of how this could force the Federal Reserve to adjust its monetary policy, postponing potential rate cuts. This uncertainty adds another layer of apprehension over investor sentiment.
Consequently, traders are left to navigate turbulent waters, with the Nifty50 index firmly facing resistance around 23,450. The message is clear: sellers seem to hold the upper hand. Until the markets demonstrate strong recovery signs, caution remains the watchword among investors.
Speaking of caution, market breadth emphasized this sentiment, as nearly 99% of midcap and 95% of small-cap stocks closed with losses on this fateful trading day. The sell-off has sent numerous stocks to their 52-week lows, signaling the extent of investor panic. The fact remains, turbulence is far from over.
Industry veterans are now reevaluing their strategies, as many assess the impacts of trade tensions and continued FII selling on upcoming investments. All eyes will remain on the Federal Reserve and forthcoming trade discussions between the US and India, especially with Prime Minister Narendra Modi set to visit the US shortly.
The approaching diplomatic engagements could either calm or escalate current tensions, but for now, the markets continue to feel the pinch of Trump's policy decisions.