Share Market Crash: Sensex Drops 1069 Points, Investors Lose ₹3 Lakh Crore

The Indian equity markets experienced a significant downturn on Tuesday, as benchmark indices plummeted by over 1%. 28%. 12%. This sharp correction led to a substantial erosion of investor wealth, with the total market capitalization of BSE-listed firms dropping from ₹469 lakh crore in the previous session to ₹466 lakh crore, resulting in a loss of approximately ₹3 lakh crore.

Broader market indices also faced selling pressure, although they performed relatively better than the front-line benchmarks. 76%. According to market data, the negative sentiment was driven by a combination of global macroeconomic factors and sector-specific weaknesses, particularly in the information technology space.

Impact of US Tariff Policies and Trade Uncertainty

A primary driver of the market slump is the growing concern over the US administration's tariff strategies. Reports indicate that the Trump administration plans to take advantage of Section 232 of the Trade Expansion Act of 1962 to implement global tariffs, bypassing recent judicial setbacks. President Donald Trump has issued warnings to nations supporting the US Supreme Court's decisions against previous tariffs, suggesting they could face higher import duties. Market participants are closely monitoring the upcoming State of the Union address on February 24 for further clarity on trade policies.

Escalating US-Iran Geopolitical Tensions

Geopolitical instability in the Middle East has further dampened investor confidence. Widespread protests in Iran and the subsequent government response have led to increased friction with the United States. Washington has issued warnings of potential military action, and the next round of nuclear negotiations is scheduled for February 26. This heightened state of alert has prompted investors to move away from riskier assets in emerging markets like India, seeking safety in traditional havens.

Massive Sell-off in the IT Sector

The IT sector was the biggest laggard in Tuesday's session, with the Nifty IT index crashing nearly 5%. The index has seen a cumulative decline of approximately 21% in February alone. Concerns regarding AI-driven disruptions and higher interest rates in the US have triggered a global sell-off in tech stocks. Notably, developments involving Anthropic's Cloud Code tool and its potential to automate legacy system modernization have impacted the valuation of major IT service providers, including IBM and its Indian counterparts.

Rising Global Crude Oil Prices

Brent crude prices rose by 1% on Tuesday, crossing the 72 dollar per barrel mark and approaching a six-month high. As the world's third-largest importer of crude oil, India is highly sensitive to fluctuations in energy prices. Higher oil costs exert pressure on the country's macroeconomic stability, potentially leading to increased inflation and a wider current account deficit. The upward trajectory of oil prices has Importantly weighed on domestic market sentiment.

Strengthening US Dollar and FII Outflows

20% and approaching the 98 level. A stronger dollar typically leads to capital outflows from emerging markets as foreign institutional investors (FIIs) seek better returns in dollar-denominated assets. While there was a brief period of FII inflows following the India-US trade deal announcements, the combination of high domestic valuations and a solid dollar has raised concerns about the sustainability of these inflows, contributing to the market's downward move.