On February 24, 2025, Indian benchmark equity indices experienced significant declines, with the BSE Sensex and Nifty50 opening sharply lower amid mounting investor worries. The BSE Sensex plunged over 750 points, reaching 74,776.02, down 535 points or 0.71%, and the Nifty50 followed, dipping below the psychologically significant 22,600 mark to 22,627.35, down 169 points or 0.74%.
This downturn marks the fifth consecutive session of negative performance for the Indian stock markets, attributed largely to global market weakness and rising concerns over US economic conditions. The recent drop in US consumer sentiment has heightened fears of potential tariff threats, particularly due to statements from former President Donald Trump, which could impact trade patterns and investor confidence.
Industries across the board felt the strain, with notable declines observed among major sectors including IT, financial services, and real estate. The Nifty IT index alone dropped by 1.8%, affected heavily by underperformers like HCL Technologies, LTTS, and Coforge. Meanwhile, the Nifty Realty index fell by 2.21%, illustrating the widespread impact on investor portfolios.
The total market capitalization of all listed companies on the Bombay Stock Exchange (BSE) plummeted by ₹5.07 lakh crore, indicating the severity of the market’s decline, as only five of the thirty Sensex stocks managed to stay positive amid the turmoil. Stocks such as Zomato, HCL Tech, and TCS saw sharp drops, reflecting investor anxiety as they weighed the future economic outlook.
International patterns also played a role; reports indicated declining activity among Asian markets, with many tracking losses sustained on Wall Street. The market's response coincides with growing fears over stagflation—characterized by slow growth combined with rising inflation—that could potentially deter foreign investments, pushing investors toward more stable assets like the US dollar.
“FII selling continues unabated in the Indian stock market,” noted Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “Revival of FII investment (from foreign institutional investors) will happen when economic growth and corporate earnings revive.” With FIIs having offloaded shares worth ₹1,01,737 crore so far this year, this trend signals growing caution among international investors and may lead to extended volatility.
Domestically, institutional investors have attempted to counterbalance this trend, purchasing stocks worth ₹2,884.61 crore recently. Yet, the overall sentiment leans toward pessimism, fueled by upcoming events like February derivatives expiry and the release of core inflation data, which investors hope will show signs of improvement.
Experts suggest upcoming core inflation measures may be the tipping point for market recovery, but concerns over potential tariffs loom large. “Options data suggests the market is likely to remain below 22,500,” commented Akshay Chinchalkar, Head of Research at Axis Securities, as he advised caution moving forward.
The mood is cautious but suggests room for potential recovery should positive economic data emerge. Analysts like Kunal Kamble, Senior Technical Research Analyst at Bonanza, indicated, “The Nifty Index closed negatively for the second consecutive week, forming lower highs and lower lows, indicating bearish sentiment.”
Market participants have taken note; equity mutual funds are sitting on cash, waiting for favorable conditions to re-enter the market as they look for stable buying opportunities amid the correction phase. The sentiment is cautious yet hopeful, emphasizing the need for vigilant monitoring of economic indicators and tariff developments as the week progresses.
Investors and analysts alike remain vigilant, recognizing the complex interplay between domestic performance and international externalities. The next few weeks will be telling as the Indian markets continue to navigate this challenging environment, with hopes for stabilization riding on upcoming economic indicators and corporate earnings reports.