Indian equity markets extended their losing streak today, January 21 as well after Tuesday’s heavy sell-off. Some of the key factors behind today’s sharp fall are weak global cues and rising trade-war concerns. Continuous selling by investors also added pressure to the market. Major indices, sector stocks, and the broader market all moved lower in the intraday trading session.
The Sensex plunged over 1,000 points, while the Nifty slipped to the 25,000 level, down nearly 1% in the intraday trading session today.
Let’s take a look at the key reasons why the market is falling
Global cues turn unfavourable
One of the biggest triggers for today’s fall is the weak global market environment. Wall Street saw a sharp overnight decline. This also set a negative tone for Asian markets.
Adding to the uncertainty are rising trade-war concerns linked to fresh geopolitical tensions involving the United States and Europe.
Heavy pressure from foreign investors
Foreign institutional investors have continued to cut exposure to Indian equities, extending their selling streak.
Sector-wide selling deepens the fall
The sell-off has not been limited to a few pockets of the market. All sectoral indices were trading in the red.
Stocks from automobiles, information technology, metals and banking saw a notable declines of around 1%.
The pressure was even more pronounced in sectors such as information technology, media, financial services and real estate, which fell over 2%.
Broader market bears the brunt
The broader market faced sharper cuts as well. Both BSE midcap and smallcap stocks plunged over 2%,
Global risk-off sentiment weighs on markets
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, “There is risk-off sentiment in global markets now in response to Trump’s Greenland policy, the threatened tariffs on eight European countries and Europe’s hardening anti-Trump stance. Globally stock markets are down and the flight to the safety of gold is up. There is no clarity on how the situation will evolve. If the threatened tariffs come into effect, Europe will retaliate and this will lead to a trade war with bad consequences for global trade and global growth. If such a scenario plays out stock markets will witness further selling.
‘On the other hand, if Trump chickens out as he had done in the past, or succumbs to pressure, markets will rebound. A combined and united Europe has many options like the much talked about ‘Sell America’ wherein they sell US treasuries leading to sharp fall in dollar. This will hurt Trump. Public opinion in US is also against Trump’s Greenland annexation plan. Many unexpected developments can happen and the market is likely to react strongly to the developments,” he added.