Sensex, Nifty Crashed On February 3: Budget Vs Trump's Tariff, What Is Impacting Indian Stock Market?

Sensex, Nifty Crashed On February 3: Budget Vs Trump's Tariff, What Is Impacting Indian Stock Market?

Stock Market Crash: The Indian stock market nosedived in the opening bell of Monday, February 3, 2025, with Sensex plunging by nearly 732 points and erasing the 77,000 mark once again. Nifty 50 also faced the wrath of bears with a decline of 243 points to fall below 23,250 levels. Both the benchmarks have tumbled by more than 1% each. The performance comes after the Union Budget announcement where deep tax changes were announced by FM Nirmala Sitharaman.

Sensex, Nifty On February 3:

Sensex nosedived by nearly 732 points to hit an intraday low of 76,774.05, while Nifty 50 shed about 243 points after touching an intraday low of 23,239.15. Bank Nifty also dropped by nearly a per cent. India’s volatility index was up by 4%.

Nifty Midcap 100 and Nifty Smallcap 100 indexes were down by 1% to 2%. Metal stocks took the worst hit with Nifty Metal index down by 3%, while Nifty Media and Nifty PSU bank index plunged by 1.2% each. Nifty Oil and Gas index also dropped by 2%.

Stocks like L&T, NTPC, Power Grid, Tata Steel, Tata Motors, and Reliance Industries were major draggers of the benchmarks, falling in the range of 1% to 4%. However, Titan, Nestle, Maruti and Bajaj Finserv stock were top gainers with 1.5% to 2% upside.

What Is Impacting Indian Stock Market On Monday?

Sensex and Nifty tracked the weak global cues as Donald Trump’s tariff war heightened on Canada, Mexico and China. Canada and Mexico have stated that they will impose retaliatory tariffs, while China has signalled for corresponding countermeasures to challenge Trump’s tariff policies. According to the 47th President of the US, tariffs are required to stop the transaction of illegal drugs and immigration in his country.

Trump has levied about 25% tariff each on Mexico and Canada while imposing 10% on imports from China.

Nonetheless, his Tariff has created turmoil among neighbouring countries and China. That is why, Asian stocks plunged with Japan’s Nikkei 225 falling by 2.4%, while South Korea’s Kospi down by 3%. Hong Kong’s Hang Seng and Australia’s ASX 200 also dipped between 1% to 2%.

Also, US stock futures fell as much as 2% owing to the new tariffs on major economies. Investors fear that the move could potentially impact the economy. The dollar index, on the other hand, approached 2-year highs nearing 110 levels against a basket of currencies.

Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, that despite an excellent Budget the market will be under pressure from the Trump tariffs and the heightened global uncertainty these ‘initial round of tariffs’ have triggered. It is important to understand that the 25% tariffs imposed on Mexico and Canada are to punish them for issues like immigration and illicit trade in fentanyl.

Vijayakumar added that Trump may use tariffs again against other countries on non-trade issues. China’s response to the 10% tariffs has been more responsible. For now, they have not reacted like Mexico and Canada by imposing tariffs on imports from the US. Instead, they are moving the WTO against the US action.

“Now we don’t know how this will pan out. For now, India is not affected. Therefore, the impact on the Indian market will be less. But the spike in the dollar index to above 109.6 will trigger more selling by FIIs putting the market under pressure,” he added.

Lastly, Vijayakumar said, domestic consumption stocks will be relatively resilient since they stand to benefit from the income tax cuts announced in the Budget.

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Original news source Credit: www.goodreturns.in

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