India’s stock benchmarks, Sensex and Nifty, were trading sharply lower on February 28, slipping one percent as investors grappled with U.S. President Donald Trump’s fresh tariff threats and awaited key December quarter GDP data. and BSE Smallcap indices falling over 2 percent. Broader markets took a bigger hit, with both the BSE Midcap and BSE Smallcap indices tumbling over 2 percent.
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.
At 10:03 am, the Sensex was down 1,009.64 points or 1.35 percent at 73,602.79, and the Nifty was down 316.25 points or 1.4 percent at 22,228.80. About 517 shares advanced, 2,661 shares declined, and 107 shares unchanged. 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.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, remains cautious about market stability. He pointed to Trump's announcement of a 25 percent tariff on EU imports and Nvidia's mixed quarterly results as key negative catalysts weighing on investor sentiment.
"There is no respite for foreign outflows, which is adding pressure on the markets at this point. Additionally, global cues remain negative, with Asian and U.S. markets under pressure and profit booking happening across the broader equity markets," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.
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"Right now, investors worldwide are grappling with uncertainty surrounding Trump's tariff policies and a general lack of direction in the market. As a result, many prefer to stay in cash," he added.
Investor focus will also be on foreign inflows as MSCI's February 2025 rebalancing adjustments take effect, potentially triggering $1.4 billion in inflows, particularly in the last hour of trading.
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.
All 13 major sectoral indices were in the red, with most declining between 1 and 3 percent. IT, financials, and auto stocks were the biggest drags on the Nifty, pulling the index lower.
The Nifty IT index slumped over 3 percent as all 10 of its components fell between 1 and 4 percent.
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Among Nifty 50 stocks, Infosys, Wipro, IndusInd Bank, M&M, and Tech Mahindra were the worst hit, slipping 3–4 percent. On the other hand, Grasim, RIL, Shriram Finance, and Coal India were the top gainers, rising 0.3–3 percent.
Shares of Premier Energies tumbled over 3 percent as its six-month shareholding lock-in period ended.
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.
"On the downside, 22,500 serves as a crucial support level, with a breach below this mark potentially triggering extended selling toward the 22,300–22,000 range," said Hardik Matalia, Derivative Analyst at Choice Broking. "On the upside, immediate resistance is seen at 22,600, followed by a critical hurdle near 22,800."
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