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Indian share market benchmarks Sensex and Nifty crashed as much as 1% on Tuesday, extending their losing streak for the fifth consecutive session
Stock Market Crash On February 11
Stock Market Crash: Indian equity indices dropped for the fifth straight session on Tuesday, pressured by declines in banking, auto, metal, and IT stocks. Weak domestic earnings and ongoing concerns over US trade policies further dampened investor sentiment.
The 30-share Sensex dropped 1,018.20 points, or 1.32 per cent, to finish at 76,293.60, after fluctuating between 77,387.28 and 76,030.59 throughout the day.
Similarly, the NSE Nifty50 declined by 309.80 points, or 1.32 per cent, ending at 23,071.80. The Nifty50’s highest point for the day was 23,390.05, while the lowest was 22,986.65.
At the day’s low, BSE Sensex was trading 1,227 points, or 1.59 per cent, lower at 76,084, while the Nifty50 fell below the 23,000 mark around 2:09 pm. All major sectors witnessed declines, with the smallcap and midcap indices dropping by 3.9 per cent and 3.5 per cent, respectively.
The total market capitalization of all BSE-listed companies fell by Rs 9.87 lakh crore, bringing it down to Rs 407.95 lakh crore.
A significant drop in major indices like Nifty Bank, Nifty Financial Services, and Nifty IT highlighted intense selling pressure in domestic markets.
The markets were weighed down by rising US trade tensions, President Donald Trump’s tariffs, ongoing foreign fund outflows, and weak corporate earnings.
Key Reasons For Stock Market Crash On February 11
Trump’s Tariff Escalation Fuels Global Fears
One of the major factors driving Foreign Institutional Investor (FII) outflows is concerns over U.S. President Donald Trump’s tariff policies. His recent actions have overshadowed positive domestic factors, such as the consumption boost from the Union Budget 2025 and the Reserve Bank of India’s repo rate cut.
Trump has raised tariffs on steel and aluminum imports, removing exemptions and duty-free quotas for major suppliers like Canada, Mexico, and Brazil. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, “Trump’s decision to impose 25% tariffs on steel and aluminum will impact countries like Mexico, Brazil, South Korea, and Vietnam more. Metal prices will remain soft for a long time.” He also noted that new steel tariffs could affect India due to concerns over dumping, contributing to a sharp decline in metal stocks.
Rupee Weakness Adds Pressure to FII Selling
The rupee’s continued weakness added further pressure to market sentiment, hitting a record low of 88 per US dollar on Monday.
Sandip Agarwal, Fund Manager and Co-Founder of Sowilo Investment Managers LLP, explained, “The decline in the market is primarily due to the rupee’s depreciation. When the rupee weakens, FII selling intensifies because their real returns diminish.”
However, the rupee recovered by around 21 paise today, reclaiming the 87 mark, possibly due to an intervention by the Reserve Bank of India (RBI). Despite this rebound, the rupee remains Asia’s worst-performing currency this year, with nearly $9 billion in outflows from Indian equities.
FII Exodus Continues
Foreign investors have pulled out Rs 12,643 crore from Indian equities in February alone, adding to January’s massive Rs 87,374 crore sell-off. Agarwal further emphasized, “The key concern right now remains rupee depreciation, closely tied to global economic conditions and Trump’s policies.”
Weak Earnings Dampens Sentiment
Weak third-quarter earnings further dampened investor sentiment. Shares of Eicher Motors fell 7 per cent after the company missed profit and margin estimates for Q3 FY25, impacted by higher costs and declining sales of high-margin motorcycles. Similarly, Escorts Kubota shares dropped 5.3 per cent after reporting weaker-than-expected earnings and providing a cautious outlook for the coming quarters.
Global Market Pressure
Globally, equities remained under pressure as investor caution prevailed amid Trump’s tariff escalation. Asian markets slipped, with Hong Kong’s Hang Seng down by 0.3 per cent, while S&P 500 futures dropped by 0.2 per cent. Euro Stoxx 50 futures also saw declines. Meanwhile, the dollar strengthened, and gold prices rose, signaling a flight to safety as global trade war fears rattled investors.
Valuation Concerns in Mid- and Small-Caps
Valuation concerns in the midcap and smallcap segments also weighed on the markets. S. Naren, CIO of ICICI Prudential AMC, recently warned about “absurd” valuations in this segment, urging investors to exit mid- and small-cap stocks. His comments sparked debates across the mutual fund industry, adding to the bearish sentiment in the broader market.
Large-Caps Offer Safety
V.K. Vijayakumar from Geojit Financial Services noted, “The relentless selling by FIIs in large-caps has made their valuations fair, while the valuations of mid- and small-caps continue to be excessive.” He suggested that patient investors might find opportunities in quality large-cap stocks, particularly in banking, IT, autos, pharma, and capital goods.
Pressure on Auto, Realty, and Pharma Stocks
A broad-based decline in auto, realty, and pharma stocks also weighed on the markets, primarily due to modest Q3 earnings and weaker guidance for the coming year. Stocks like Eicher Motors, along with key players in these sectors, saw sharp declines during today’s session.
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