Share Market Roundup: Sensex-Nifty Decline Despite Budget Relief and RBI Rate Cut
Despite income tax relief in the budget and the Reserve Bank’s long-awaited interest rate cut, the stock market failed to generate the expected enthusiasm last week. Even the Bharatiya Janata Party’s (BJP) landslide victory in New Delhi and the potential benefits of a double-engine government did not have the anticipated bullish effect on the markets.
On Monday (February 10), the stock market opened with a decline in the Sensex and Nifty and ended the day with a significant drop, fueling investor disappointment.
In a completely negative trading session, the BSE Sensex closed at 77,311.80, down 548.39 points. At one point, the Sensex had dropped 671 points, raising concerns that it might break the 77,000 mark. Meanwhile, the Nifty closed at 23,381.60, down 178.35 points. Both indices declined by 0.5% each.
However, the drop in mid-cap and small-cap stocks was even steeper, with losses ranging between 2% and 3%.
Among the sectoral indices,
- Nifty Bank ended down 177.85 points (0.35%) at 49,981.
- Nifty Midcap index fell 2.12%.
- Nifty Smallcap index plunged 2.28%.
Key Reasons for the Market Sell-Off
1. Metal Sector Shares Plunge
On Friday, former US President Donald Trump announced plans to impose an additional 25% tariff on all steel and aluminum imports, alongside existing tariffs. While no specific country was mentioned, this announcement led to a massive sell-off in Indian metal sector shares.
Shares of major companies like JSW Steel, Tata Steel, Hindalco, Vedanta, SAIL, and NMDC fell between 3% and 4%, while the Nifty Metals index dropped 2.94%.
2. Withdrawal of Foreign Investors
Continued foreign investor sell-offs have been a major factor dampening market sentiment. Additionally, the disappointing quarterly performance of companies has raised concerns about near-term growth.
Vinod Nair, Head of Research at Geojit Financial Services, stated that the Indian stock market currently lacks strong factors to attract foreign investors.
3. Rupee Hits an All-Time Low
Trump’s tariff announcement also strengthened the US dollar, negatively impacting the Indian rupee.
On Monday, the rupee fell to a record low of 87.95 per dollar, even briefly crossing the 88 mark. It suffered a 0.6% decline in a single session.
Meanwhile, gold prices surged to record highs, as investors sought safe-haven assets amid rising global uncertainty.
