On Tuesday, February 11, 2025, Indian stock markets experienced a significant downturn, driven by apprehensions over U.S. trade policies and underwhelming domestic earnings reports. The BSE Sensex plummeted by 1,047 points, while the Nifty 50 index declined by 339 points.
Sector-Wide Declines
All 13 major sectors witnessed declines. The broader small-cap and mid-cap indices suffered losses of 2.5% and 2%, respectively. Financial stocks dipped by 1%, with HDFC Bank leading the downturn. Eicher Motors saw a 6% drop after missing quarterly profit and margin expectations, adversely affecting the auto sector.
Global Trade Tensions
Investor sentiment was further dampened by U.S. President Donald Trump’s recent decision to increase tariffs on steel and aluminum imports to 25%, with plans to impose additional reciprocal levies on various countries in the coming days. This move has raised concerns about escalating global trade tensions.
Foreign Investor Exodus
The Indian markets have also been impacted by sustained foreign outflows, with foreign investors withdrawing approximately $9.94 billion from Indian equities so far this year. This trend reflects growing caution among global investors regarding emerging markets amid uncertain international trade dynamics.
Adani Group’s Resilience
In contrast to the broader market downturn, most Adani Group companies reported gains. Adani Enterprises, for instance, rose by 4% following an executive order from President Trump directing the U.S. Justice Department to ease enforcement of a law prohibiting bribery of foreign officials. Additionally, Adani’s agreement with the Mayo Clinic to establish affordable health campuses in Mumbai and Ahmedabad contributed to the positive performance.
Market Outlook
Analysts suggest that the current market decline is primarily driven by uncertainties surrounding U.S. tariff policies and disappointing domestic earnings. The bearish sentiment is expected to persist until there is greater clarity on international trade relations and an improvement in corporate earnings.
