Sensex, Nifty Crashed After Trump's Inauguration Speech; Why Indian Stock Market Is Falling On Jan-21?

Indian stock market after opening higher, gave up their gains and traded under an extreme bearish tone on Tuesday, January 21. The performance comes after Donald Trump's inaugural speech where he signed several executive orders but did not announce any strict tariff rules. Sensex dropped by over 443 points and Nifty 50 plunged by nearly 113 points. Both benchmarks have erased their 77,200 and 23,400 marks. In percentage terms, nearly 1% drop is recorded in the Indian benchmarks.

Sensex price:

At the time of writing, Sensex traded at 76,258.63, down by 814.81 or 1.06%. The benchmark shed as much as 849 points to hit an intraday low of 76,224.79. Stocks like Ultratech Cement, HCL Tech, and ITC were top gainers, however, the upside was marginal to 1%. Meanwhile, Zomato, Adani Ports, Reliance, NTPC, SBI, and ICICI Bank were top bears, declining by 1% to 10%.

BSE-listed companies market cap plummeted by more than Rs 3.66 lakh crore to Rs 427.93 lakh crore as of now on January 21, compared to m-cap of Rs 431.59 lakh crore on the previous day. Of the total 3,691 stocks that traded on BSE, 1,998 stocks declined while 1,512 stocks advanced and 181 stocks remained unchanged. BSE Bankex and BSE Sensex Next 50 tumbled by 445 points and 698 points respectively.

Nifty 50 Price:

Currently, Nifty traded at 23,160.35, down by 184.40 points or 0.79%. The benchmark erased its intraday high of 23,426.30 and reached below 23,200 levels to hit an intraday low of 23,127.70. Overall, Nifty has dipped by 217 points so far in the day. Nifty Next 50 was down by 2%, while Bank Nifty dipped by 492 points or 1%. India's volatility index plunged by 5%.

Nifty Midcap 100 and Nifty Smallcap 100 indices saw selloffs of up to 1.6% each. All sectoral indices turned in deep red. Nifty Consumer Durables took the massive beating of bears, nosediving by 3.2% followed by the Nifty Realty index which dropped by 2.9%. Nifty Auto, Nifty Financial Services, Nifty PSU Bank, Nifty Private Bank, Nifty Metals and Nifty Oil & Gas stocks tumbled by more than 1% each.

Donald Trump is sworn in as the 47th US President of the world's greatest economy. During his speech, on January 20, Trump assures American citizens to restore the country's sovereignty and to make it even stronger, greater and exceptional than before. He confidently said, "America's decline is over", while taking a jibe at the previous Joe Biden administration. Trump's inauguration ceremony takes place on January 20, which will also include the oath ceremony of his administration starting with vice-president Vance.

Trump said the 'Golden age of America' begins right now! Trump said the country's sovereignty will be reclaimed, and its people's safety will be restored. He said the scales of justice will be rebalanced. He spoke to the crowd, that his administration's top priority would be to create a nation that is proud, prosperous and free.

Dr V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services, said Trump 2.0 has kicked off without much clarity on Trump's likely economic decisions. In his inaugural address, he was clear on immigration but sounded vague on tariffs. The indication of a likely 25% tariffs on Canada and Mexico suggests that the tariff hike policy will be implemented gradually. The currency market has reacted with a cut in the dollar index to 108.43 and the 10-year bond yield has declined to 4.54%.

Vijayakumar added, this is the classic case of 'buy on rumours and sell on news.' It is likely that further delays in tariff hikes will weaken the dollar and bring down the bond yields. If this happens, it will be good for emerging markets like India.

"But if the FII flows to India are to turn positive consistently, we will have to see a pick -up in India's GDP growth and corporate earnings. That's the crucial macro data to watch," Vijayakumar added.

Prashanth Tapse, Senior VP (Research), Mehta Equities said, a major concern is the record exodus of Foreign Institutional Investors, with Rs. 50,912.60 crores sold so far this January. Key stocks in focus include Zomato, whose shares dropped 7.27% post-Q3 earnings, Dixon Technologies with a 124% YoY surge in net profit, and MCX reporting strong Q3 earnings. Nifty is expected to trade with a positive bias, though Trump's tariff decisions remain a wildcard.