Sensex drops 1,235 points to 7-month low on Trump’s tariff announcements and global concerns

New Delhi (The Uttam Hindu): On January 21, 2025 the Indian stock market experienced a significant downturn with the benchmark Sensex plunging by 1,235 points, reaching a seven-month low. This steep drop was largely attributed to global concerns triggered by U.S. President Donald Trump's recent inauguration and his announcement of tariffs on neighboring countries. The Sensex closed at 75,838.36 reflecting a loss of 1.6% while the Nifty 50 index fell by 320.10 points or 1.37%, to settle at 23,024.65. Market analysts linked the sharp selloff to multiple factors, including Trump’s aggressive trade policy rhetoric, particularly directed at BRICS nations and his threat of a 100% tariff on countries reducing their dependence on the U.S. dollar for international trade.

These statements fueled a wave of negative sentiment among investors in India, leading to widespread selling across various sectors. As a result, the market witnessed an erosion of over ₹7 lakh crore in investor wealth. Among the major underperformers on the Sensex were key companies like Zomato, ICICI Bank, Reliance Industries and Mahindra & Mahindra. Zomato in particular saw a sharp decline with its stock price dropping nearly 11% after it reported disappointing quarterly earnings, including a 57% year-on-year drop in net profit for the December quarter. This significantly contributed to the overall decline in the index. In contrast, UltraTech Cement and HCL Technologies were among the few stocks that ended in the positive, standing out in an otherwise tumultuous market. The market breadth was overwhelmingly negative; out of over 4,000 stocks traded on the BSE, 2,788 saw losses, while only 1,187 gained.

Sector-wise analysis revealed that all major indices ended in the red with the Consumer Durables and Realty sectors bearing the brunt of the losses, each experiencing a decline of over 3%. The volatility index, India VIX surged by nearly 6% highlighting heightened investor anxiety amid these developments. The persistent selling pressure from foreign institutional investors (FIIs) who had offloaded equities worth ₹48,023 crore as of January 20, further worsened the bearish sentiment in the market. Analysts indicated that this trend could persist unless there are signs of recovery in corporate earnings or stabilization in global trade relations. With uncertainty surrounding Trump’s trade policies and their potential impact on India’s economic outlook, investor sentiment remains fragile and cautious leaving the market vulnerable to further declines.