Sensex Tanks Over 600 Points: 3 Reasons Why Stock Market is Falling Today
Robert J. Williams
Beatrice Quinn
Stock markets experienced a significant downturn in early trade on Monday, despite positive domestic developments such as the Reserve Bank of India’s (RBI) rate cut and the Bharatiya Janata Party’s (BJP) victory in the Delhi elections. The benchmark indices opened lower and continued to slide as selling pressure mounted.
The BSE Sensex plummeted over 600 points, while the NSE Nifty saw a decline of nearly 200 points in the morning session. The Sensex reached a low of 77,189.04, a sharp drop from its previous close of 77,860.19.
As of 10:30 AM, the Sensex had fallen by 579.15 points to 77,281.04, while the Nifty50 decreased by 177.90 points to 23,382.05.
Market Experts on the Selloff
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted that foreign investors are continuing to sell their holdings, contributing to the market’s downward pressure.
“Indian markets are witnessing selling pressure from foreign portfolio investors. Despite the rate cut and the recent budget, it hasn’t been enough to attract foreign portfolio investors. They remain sellers. The lack of earnings traction in the medium to short term is adding pressure on Indian markets. As long as Nifty stays above 23,000, the medium to short-term outlook remains positive,” said Bathini.
Rupee Hits Record Low
The rupee weakened to a record low on Monday amid concerns over potential U.S. trade tariffs, which affected regional currencies. Traders informed Reuters that the RBI might intervene to stabilize the currency if necessary.
In early trade, the rupee fell to 87.95 per U.S. dollar, surpassing its previous record low of 87.58 from last week. As of the latest update, it was trading at 87.93, down 0.6% for the day.
A weaker rupee increases the cost of imports, particularly crude oil, and negatively impacts foreign investment sentiment. Analysts suggest that if this trend continues, the RBI may need to take further measures to stabilize the currency.
Metal Stocks Drag Market Lower
Metal stocks were among the hardest hit as U.S. President Donald Trump announced new tariffs on steel and aluminium imports. Speaking to reporters on Air Force One, Trump stated that the new 25% tariffs would be applied to all steel and aluminium imports, in addition to existing duties. The official announcement was expected on Monday, with tariffs coming into effect almost immediately.
This news led to a significant selloff in metal stocks in India. The Nifty Metal index dropped 2.94%, with major companies experiencing steep declines.
- Vedanta Limited fell 4.61%
- Steel Authority of India (SAIL) lost 4.16%
- Tata Steel declined 3.48%
- JSW Steel was down 3.04%
- National Aluminium Company dropped 2.90%
- NMDC lost 2.88%
- Jindal Steel & Power fell 2.35%
The broad decline in metal stocks reflected fears of reduced demand and pricing pressure due to the new tariffs.
What’s Ahead?
The recent Delhi election results were anticipated to bring some stability to market sentiment, but global concerns and foreign investor activity have overshadowed their impact. Analysts at Motilal Oswal Financial Services (MOFSL) noted that the BJP’s victory in Delhi should be a positive sign for markets, as it alleviates concerns about political stability at the Centre.
The BJP secured 48 out of 70 seats in the Delhi Assembly elections, ending a 27-year gap in its rule in the state. MOFSL attributed the win to the party’s campaign focus on “double-engine” governance, Prime Minister Narendra Modi’s leadership, and a strong anti-incumbency factor against the Aam Aadmi Party (AAP).
While this result is expected to boost confidence, MOFSL believes that market attention will now return to corporate earnings, company guidance, and global economic trends. Uncertainty over U.S. trade policies and foreign investor selling could continue to impact the market in the coming days.
In conclusion, the stock market’s current decline is driven by a combination of foreign investor activity, currency fluctuations, and sector-specific challenges, particularly in the metals industry. As investors navigate these volatile conditions, close attention to policy developments and economic indicators will be crucial.
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