On February 11, 2025, the Indian stock market experienced a significant decline, with the S&P BSE Sensex dropping more than 1,000 points, closing at 76,293.60, marking a 1.32% fall. Similarly, the NSE Nifty50 index ended the day with a 1.32% decline, losing 309.80 points to settle at 23,071.80. The sharp drop in stock prices has sparked concern among investors, and several factors contributed to the bloodbath.
One of the primary reasons for the downturn was global trade concerns. The market reacted negatively to an announcement by U.S. President Donald Trump, who revealed plans to impose increased tariffs of 25% on steel and aluminum imports, without exceptions. This move raised fears of escalating trade tensions, which could disrupt global trade flows and negatively impact economies worldwide. As a result, investor sentiment soured, triggering the widespread sell-off.
Foreign Institutional Investors (FII) also played a significant role in the market's decline. In the preceding days, there was a noticeable outflow of funds as FIIs offloaded equities worth ₹211.93 crore.
This trend of foreign capital withdrawal has been a consistent theme in recent months, and it has intensified. In fact, October 2024 saw FIIs pulling out nearly ₹94,000 crore (approximately USD 11.2 billion), marking the worst-ever outflow in a month. This sell-off has put additional pressure on the markets.
Sectoral weakness was another contributing factor, with all major sectors closing in the red. The Nifty Energy index was particularly hard-hit, falling by 3.26%. Stocks from key players like Sun Pharma, Reliance Industries, Infosys, Tata Motors, Titan, and Maruti suffered significant losses, dragging the market further down.
On the other hand, Mahindra & Mahindra, Tech Mahindra, HCL Technologies, and IndusInd Bank were among the few stocks that bucked the negative trend.
Furthermore, investor caution ahead of the U.S. Federal Reserve’s interest rate decision also added to the market’s volatility. With the Federal Reserve set to announce its decision in the coming days, investors were hesitant, fearing that any tightening of monetary policy could have far-reaching consequences on global liquidity and market stability.
The combined effects of these factors resulted in the erosion of investor wealth, with the market capitalization dropping by approximately ₹7.37 lakh crore.
This event highlights how sensitive the Indian stock market is to both domestic and global economic developments, investor sentiment, and geopolitical issues. Investors are advised to stay alert and informed to better navigate such turbulent market conditions.
