Stock Market Crashed On February 28; Why Sensex Fell 1,453 Pts & Nifty Dropped 440 Pts On Friday? GDP Eyed!

The stock market crashed: Indian stock market crashed sharply with Sensex erasing its pivotal 74,000 mark and Nifty 50 giving up 23,000 tones. Both benchmarks have nosedived by nearly 2% each. The performance comes ahead of GDP which is estimated to be around 6.3%. Also, frenzy selling arose after Trump heightened his tariff plan with the latest threat of 25% on the European Union. Relentlessly selling further added to my woes.

Sensex, Nifty:

Sensex nosedived by as much as 1452.83 points to hit an intraday low of 73,159.60. While Nifty 5 plunged by 439.9 points to hit an intraday low of 22,105.15. Both benchmarks traded near their day's low.

Top losers were IndusInd Bank, Tech Mahindra, Titan, M&M, Infosys, Maruti Suzuki, Zomato, TCS, Bharti Airtel, HCL Tech, M&M, and Tata Motors with downside of 3% to 6%. On the other hand stocks like HDFC Bank and Reliance were in green but could not pull the market out of an extremely bearish tone.

Bank Nifty dropped by 585 points to near 48,159. Nifty Smallcap 100 and Nifty Midcap 100 indexes tumbled between 2% to 3%. India's volatility index surged by 6%. All sectoral indices were in deep red with PSU bank, oil & gas, media, IT, auto and metal stocks taking the worst hit. The Nifty IT index was the top loser with a decline of 4.09%, at the time of writing.

Why Sensex, and Nifty Are Falling?

As per Trading Economics data, Sensex touched its lowest level since early June 2024. Traders were cautious ahead of the release of GDP data later today, with the market expecting the GDP to grow at 6.3%, still lower than the RBI's estimate of 6.8%. This decline tracked an overnight drop on Wall Street, dragged down by a selloff in tech stocks.

Also, Trading Economics data added, caution also built after President Trump confirmed 25% tariffs on European autos and new levies on Mexico and Canada starting March 4. All sectors traded in the red, led by tech, which plunged 3.7%, following a sell-off on Wall Street. The Nifty 50 slumped 1.2% to below 22,300, with notable losses from IndusInd Bank (-4.9%), Tech Mahindra (-4.7%), and Mahindra & Mahindra (-4.1%). For the month, the index is pointing to a slump of around 4.9%, which would mark the 3rd straight monthly decline, amid worries over a global trade war and persistent foreign fund outflows.

According to Dr V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services, stock markets dislike uncertainty, and uncertainty has been on the rise ever since Trump was elected the US president. 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. How China responds to the latest round of tariffs remains to be seen. Even now the markets have not discounted a full blown trade war between the US and China.

It is likely to be avoided. However, the uncertainty element has increased as reflected in the sharp spike in CBOE volatility index to 21.13, he said.

Going ahead, Vijayakumar added, "March is likely to witness recovery in the Indian market backed by better macro news flows and subdued FII selling. Since largecap 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.