Mumbai: The signs of a meltdown were there on Monday. But what came on Tuesday was a painful body blow to investors in India.
The 30-share BSE Sensex plunged 1,065.71 points on Tuesday to 82,180.47, while the Nifty 50 sank 353 points to 25,232.50 – fall of about 1.5 per cent for both indexes.
A brutal two-day selloff has thus wiped out more than Rs 10 lakh crore in investor wealth.
Nifty logged its biggest single‑day fall since April 2025, sliding to its lowest level in three months.
The hectic selloff was a result of investors’ sentiments souring globally after US President Donald Trump threatened to impose tariffs on eight European nations.
Trump’s aggressive stance on acquiring Greenland has sparked the possibility of a Trans-Atlantic trade war.
If the US proceeds with the 10% ‘Greenland levy’ from February 1 on European nations which don’t support his plan, the European Union may slap retaliatory tariffs on $108 billion of US goods.
“The volatility is likely to continue until clarity emerges regarding US-Europe standoff. Since both sides have hardened their positions, the uncertainty will linger,” V K Vijayakumar, chief investment strategist at Geojit Investments, said.
If the volatile situation amid geopolitical tensions is the primary factor, relentless foreign outflows has not helped either.
According to Vinod Nair, head of research at Geojit Investments, “Domestic markets remained cautious ahead of US Supreme Court’s ruling on Trump-era tariffs, with renewed uncertainty over US trade policy prolonging the recent consolidation. Continued FII outflows, rising US and Japanese bond yields, and a weakening rupee weighed on investor confidence.”
In January alone, foreign institutional investors (FIIs) have offloaded more than Rs 29,000 crore in Indian equities.
ICICI Securities head of research Pankaj Pandey opined that selling intensity is “on the higher side” as it’s driven by a weakening rupee and skepticism over a potential India-US trade deal.
Pre-budget jitters is being seen as another possible driver in the hectic selloff.
The Union Budget will be presented for the first time on a Sunday, February 1. Measures to boost consumption are expected from Finance Minister Nirmala Sitharaman, but many feel that fears over fiscal consolidation targets may curtail government capital expenditure.
