Share Market Today: A fresh executive order by US President Donald Trump has shaken the Indian stock market. Under this order, an additional 25 percent tariff has been imposed on India's exports, causing investors to lose about Rs 5.63 lakh crore. Sensex and Nifty fell by about 1 percent till the close. Among the major companies of the country, shares of Reliance Industries saw a fall of more than 2 percent, while pharma sector giant Sun Pharma fell by 3.40 percent and Tata Steel by about 3 percent. This decision of the Trump administration will come into effect after 12 midnight.
Prime Minister Narendra Modi said in a program that this tariff will be given a befitting reply and it will not have any major impact on India. However, the additional duty imposed on sectors like pharma and steel has hurt the market the most. Let us know what figures came out in the market and what are the other reasons behind the decline?
Continuation of heavy decline in the market
The Indian stock market faced a deep decline on Tuesday. The Bombay Stock Exchange (BSE) main index Sensex closed at 80,786.54, down 849.37 points or more than 1 percent. During the day, it fell by 949.93 points to reach the level of 80,685.98. Experts believe that further decline is possible in the coming days.
At the same time, the National Stock Exchange (NSE) Nifty closed at 24,712.05, down 255.70 points. During trading, the Nifty fell 278.15 points to a low of 24,689.60. At one time, there was a glimpse of recovery in the market, but just an hour before closing, a sharp decline started again.
Huge fall in major stocks
Shares of Reliance Industries, the third largest weight in Nifty, fell by more than 2 percent, which pulled the entire market down. The financial sector fell 1.4 per cent, with heavyweights like HDFC Bank and ICICI Bank shedding 0.8 to 1.5 per cent. Pharmaceutical stocks fell 1.7 per cent, and Sun Pharma was down over 3 per cent. Bank of America gave the stock an 'underperform' rating, citing the risk of premium valuations.
The consumer goods sector was the only one to remain bullish, with the Nifty FMCG index closing 0.8 per cent higher. But sectors like textiles, chemicals and shrimp production, which are worst hit by US tariffs, suffered. Shares of Vodafone Idea fell as much as 10 per cent as hopes of pending relief from the government were dashed. The broader market also remained under pressure, with mid-caps down 1.6 per cent and small-caps down 2 per cent.
Key factors behind the fall
Impact of US tariffs
Trump imposed an additional 25 per cent tariff on India's exports in return for oil purchases from Russia, taking the total to 50 per cent. Indian exporters will now face higher tariffs than competitors such as Vietnam and Bangladesh. Investors had been hoping for a delay or a compromise, but the confirmation shook the market. According to Homeland Security, the new tariffs will come into effect at 12:01 a.m. EDT (9:31 p.m. IST) on Wednesday.
Profit booking
Last week, the market had rallied on excitement over GST reforms, but now investors are booking profits. The Modi government plans to reduce GST on small cars from 28 to 18 per cent and health insurance to 5 per cent or zero by Diwali. Financial stocks declined, with Nifty Bank down 1.3 per cent and PSU banks down 2 per cent. The IT sector, which generates more revenue from the US, fell 0.6 per cent.
Foreign investors sell
FIIs pulled out Rs 2,466 crore on August 25, while domestic investors bought Rs 3,176.69 crore. There has been a net sell-off of Rs 20,976 crore in August so far, and Rs 1.2 lakh crore in the year to date. Jefferies said foreign portfolio investment is at a decade low.
Rupee weakness
The rupee closed 0.1 per cent lower at 87.68 per dollar. This is the fifth consecutive session. A weak rupee makes imports costlier, which affects corporate profits. Trump's decision to remove Fed Governor Lisa Cook also put the dollar under pressure.
Global markets under pressure
Global markets fell on Trump-Fed confrontation. Nikkei down 1 per cent and STOXX 600 down 0.8 per cent. Crude oil remained at a two-week high, Brent at $68.29 and WTI at $64.23.
Investors suffer a loss of Rs 6 lakh crore
BSE's market cap fell from Rs 4,55,02,643.25 crore to Rs 4,49,39,255.92 crore, i.e. a loss of Rs 5,63,387.33 crore. A total of Rs 6,88,156.53 crore has been lost in three days. Market experts say that uncertainty will remain, but domestic investment may provide some relief.