Mumbai, February 28, 2025 – The Indian stock market witnessed a sharp decline today, with the BSE Sensex falling over 1,400 points and the NSE Nifty 50 dropping by 420 points, marking the fifth consecutive monthly loss for equities. This downturn has resulted in the wiping out of nearly $1 trillion in investor wealth since September, making it the longest losing streak in 29 years.
Key Reasons Behind the Market Crash:
1. Global Trade Tensions:
The recent announcement by U.S. President Donald Trump regarding a 25% tariff on imports from Canada and Mexico, effective March 4, along with proposed additional tariffs on Chinese goods, has triggered fears of a global trade war. This uncertainty has dampened investor sentiment across global markets.
2. Foreign Investment Outflows:
Foreign institutional investors (FIIs) have been steadily pulling money out of Indian equities. Since September, over $25 billion has been withdrawn, with February alone witnessing net outflows of nearly $3.5 billion as investors shift their focus to China’s economic stimulus-backed recovery.
3. Weak Corporate Earnings:
Disappointing earnings reports from key sectors, particularly banking, have raised concerns over the health of the Indian economy. Investors fear that upcoming quarterly results may also fail to meet expectations, adding to market woes.
4. Rising U.S. Bond Yields:
The increase in U.S. bond yields has made American assets more attractive, prompting foreign investors to divert funds away from emerging markets like India. This shift has further pressured Indian equities.
5. Rupee Depreciation:
The Indian rupee has fallen for the fifth straight month, hitting a record low of ₹87.95 against the U.S. dollar. The depreciation is primarily driven by foreign investment outflows and increased demand for hedging in the forex market.
Market Experts Weigh In
Market analysts predict further volatility in the coming weeks, as global economic conditions remain uncertain. "With persistent FII outflows, global trade concerns, and a weak rupee, investors should brace for continued market fluctuations," said a leading financial expert.
As the Indian stock market grapples with these challenges, investors are advised to exercise caution and adopt a long-term perspective while making investment decisions.
(For more updates, stay tuned.)
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