Sensex and Nifty tumbled over 1 percent by midday on February 28, caught in a wave of broad-based selling as fears of a full-scale global trade war and concerns over a slowing U.S. economy rattled investors. All 13 major sectoral indices traded deep in the red, while the BSE Smallcap and BSE Midcap indices bore the brunt, sliding over 2 percent each. IT and financial stocks, where foreign investors hold significant stakes, accounted for half of Nifty 50’s losses.
Trump announced on February 27 that his proposed 25 percent tariffs on Mexican and Canadian goods would take effect on March 4, alongside an additional 10 percent duty on Chinese imports, citing the continued flow of deadly drugs into the U.S. These new tariffs will stack on top of the 10 percent levy imposed on February 4 over the fentanyl crisis, effectively raising the total duty on Chinese imports to 20 percent.
By 11:35 AM, the Sensex had plunged 960 points, or 1.3 percent, to 73,652, while the Nifty shed 300 points, or 1.3 percent, to 22,244. On the NSE, the breadth of the market painted a starkly negative picture, with just 260 stocks advancing against a staggering 2,291 declining. The Nifty 50 index has tumbled more than 4 percent so far in February and is headed for its fifth straight month of losses—the longest losing streak in 29 years. A combination of concerns over slowing economic growth, fading earnings momentum, Trump’s trade policies, and relentless selling by foreign investors has dragged the benchmarks down 14 percent from their record highs in late September.
"Stock markets dislike uncertainty, and uncertainty has been on the rise ever since Trump was elected the US president," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. "The spate of tariff announcements by Trump has been impacting markets and the latest announcement of additional 10% tariff on China is a confirmation of the market view that Trump will use the initial months of his presidency to threaten countries with tariffs and then negotiate for a settlement favourable to the US."
Follow our live blog for all the market action
Despite the prevailing pessimism, Vijayakumar believes that a full-blown U.S.-China trade war is unlikely. He expects a recovery in Indian markets in March, driven by improving macroeconomic data and a slowdown in FII outflows. "Since large-cap valuations are fair, and in pockets attractive, FIIs are unlikely to press selling as aggressively during the last few months. Long-term investors can utilise the weakness in the market to slowly accumulate fairly-valued quality largecaps and select fairly-valued stocks in the broader market, like defence stocks for instance," he added.
So far in February, foreign institutional investors have offloaded Indian equities worth Rs 47,349 crore, while domestic institutional investors have stepped in with net purchases of Rs 52,544 crore.
Sectoral carnage was most pronounced in IT stocks, with the index plunging 4 percent after U.S. jobless claims data fueled fears of an economic slowdown. So far this week, the IT index has shed nearly 8 percent, far exceeding the broader Nifty 50's decline of just over 2 percent.
Banking stocks struggled as well, with the Nifty Bank index slipping more than half a percent as 10 of its 12 constituents traded lower.
Among Nifty 50’s biggest losers, Maruti Suzuki, Titan, Wipro, IndusInd Bank, and Tech Mahindra tumbled between 4 and 5 percent. Meanwhile, Grasim, Shriram Finance, HDFC Bank, Axis Bank, and Coal India emerged as the session’s top gainers, climbing between 0.5 and 2.5 percent.
In the broader market, Premier Energies slumped 5 percent as its six-month shareholding lock-in period expired. Shares of IREDA saw an even steeper decline, dropping more than 7 percent as the stock debuted in the Futures & Options (F&O) segment at the start of the March series. The sharp drop follows a strong run, with gains in four of the last five trading sessions.
Global cues remain weak, with Wall Street closing lower on February 27 after disappointing U.S. economic data and a pullback in tech stocks, while European markets fell on renewed tariff fears. Asian markets mirrored the slump, tracking overnight declines in the U.S., particularly after a sell-off in chipmaker Nvidia.
Manish Sonthalia, CIO at Emkay Investment Managers, sees strong support for the Nifty around the 22,000 mark. "If the market dips below 22,000, expect significant buying interest to emerge. There is value in the market, but we don’t know exactly where it will come from. FIIs continue to sell relentlessly, but as the market tests deeper lows, deep value opportunities will become increasingly apparent. I believe 22,000 will serve as a crucial floor for the Nifty."
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
