Mumbai: The Indian stock market remained under strong selling pressure for the second straight session on Tuesday, January 20, as investors reacted to weak global signals, rising trade war fears, and underwhelming corporate earnings.
The Sensex fell more than 1,200 points during the day, dropping about 1.5 percent to an intraday low of around 82,000. The Nifty 50 also slipped sharply, breaching the 25,200 mark. Broader markets were hit harder, with midcap and smallcap stocks falling about 3 percent each.
Over just two sessions, the Sensex has lost more than 1,400 points, while the Nifty has declined nearly 2 percent. This sharp fall erased close to Rs 12 lakh crore in investor wealth, as the total market value of BSE-listed companies dropped significantly.
Trade war fears shake global markets
The biggest worry for investors is rising global tension. Markets turned cautious after US President Donald Trump hinted at an aggressive trade stance involving Europe. Reports suggest the European Union may retaliate with tariffs on US goods if new levies are imposed.
Such developments have raised fears of a fresh global trade war. For markets like India, which depend on global trade and foreign investment, these risks hurt investor confidence and push markets lower.
Q3 earnings fail to impress
Corporate earnings for the December quarter have been mixed so far. While most companies reported stable numbers, there were very few positive surprises.
Some firms were also impacted by one-time costs related to new labour rules. With earnings not strong enough to offset global worries, investors found little reason to stay invested at current levels.
Heavy selling by foreign investors
Foreign institutional investors (FIIs) have been steadily selling Indian shares. In January alone, FIIs have sold stocks worth over Rs 29,000 crore in the cash market.
Concerns over global trade, a weak rupee, and high stock valuations compared to earnings have pushed foreign investors to reduce exposure to Indian equities.
Shift towards safe-haven assets
As uncertainty rises, investors are moving money away from stocks into safer options. Gold and silver prices have surged to record highs, attracting fresh investments.
Many investors are booking profits in equities and shifting funds to precious metals, which are seen as safer during times of global instability.
Union Budget caution
Markets are also cautious ahead of the Union Budget on February 1. Investors are waiting to see how the government balances growth spending with fiscal discipline.
Fears that capital spending may be reduced to control the fiscal deficit are adding to the nervous mood, keeping buyers on the sidelines.
