Strong Start Followed by Sharp Decline in the Stock Market; Sensex Falls Below 73,000, Nifty Down 60 Points. Investors Remain Cautious Amidst US Tariff Policies and Global Uncertainty.
Stock Market Update: On the first trading day of the week, Monday, March 3, 2025, the Indian stock market opened bly, but experienced a sharp decline within hours. Despite positive signals from global markets, the impact of US tariff policies and cautious foreign investors was evident in the domestic share market.
The BSE Sensex opened with an increase of over 200 points at 73,427 and briefly touched a high of 73,649. However, within the first half-hour of trading, a wave of selling emerged, pushing the Sensex into the red. At 10:00 AM, the Sensex was trading at 72,962.56, down 235.54 points.
Similarly, the NSE Nifty opened at 22,194 but also began to decline shortly afterward. At 10:00 AM, Nifty was down 59.15 points at 22,065.55.
Signals from Global Markets
Rising trade tensions between the United States and China have impacted global markets. US President Donald Trump's announcement of new tariffs has increased investor caution. The US market saw continued volatility, with the Dow Jones, S&P 500, and Nasdaq showing slight gains.
In Asian markets, Japan's Nikkei index rose by 0.67%, while Australia's ASX 200 increased by 0.22%. The South Korean market was closed for a public holiday.
China's Ministry of Commerce opposed the new tariffs proposed by the United States and warned that if the US does not change its policies, China is prepared to take retaliatory measures.
Factors Potentially Impacting the Indian Market
Several key factors will play a role in determining the direction of the Indian market:
- February Manufacturing PMI data: It is expected to be 50.3, a slight increase compared to January's 50.1.
- Third-quarter GDP data: India's economic growth rate was 6.2%, better than previous figures.
- Foreign investor activity: FPI (Foreign Portfolio Investor) investors are currently cautious and are refraining from large investments due to market corrections.
Market Performance on the Previous Trading Day
The Indian market experienced a sharp decline on Friday.
- The Sensex closed at 73,198, down 1,414 points or 1.9%.
- The Nifty closed at 22,125, down 420 points or 1.9%.
The main reasons for this decline are attributed to selling by foreign investors and global uncertainty.
State of the Domestic Economy
India's economic growth rate was 6.2% in the December quarter of the 2024-25 fiscal year, an improvement over the previous quarter's 5.6%. However, some economists have expressed concerns about data revisions. The government expects growth of 6.5% for the entire fiscal year.
Furthermore, the valuation of the Indian market has fallen to its lowest level in eight years. The BSE Sensex's trailing P/E ratio has dropped to 20.4x, its lowest since May 2020.
