Sensex Sinks: The Indian stock market faced a turbulent day as the Sensex plunged over 800 points, marking one of its steepest falls in recent weeks. The sharp decline was driven by a combination of global and domestic factors, including concerns over rising interest rates, weakening global growth projections, and persistent geopolitical tensions.

These are some of the factors behind the bloodbath at Dalaal Street

Trump’s Trade Policies

American President-elect Donald Trump will take office next Monday, January 20. Moreover, there are several speculations are that the president will propose higher tariffs on countries, including India.
This imposition of Tariffs surely could further deteriorate the stock market sentiment. “A second Trump administration could significantly reshape Asia’s economic landscape, particularly through its trade policies and protectionism. A second Trump term could offer new opportunities for Southeast Asia and emerging markets but create risks for export-driven economies and industries reliant on international talent,” says Ross Maxwell, Global Strategy Operations Lead at VT Markets.

Massive Selling By FPI Affecting Sensex

In the current month, foreign portfolio investors (FPIs) have sold off Indian equities worth over Rs 21,350 crore till January 10. Additionally, after a Rs 16,982 crore selloff in December. They have been in sell mode since October last year. In October, they sold Indian stock worth Rs 1,14,445 crore, and in November they took away ₹45,974 crore from the Indian stock market.

Caution Ahead of Budget 2025 Affecting Sensex

Another reason for Sensex falling is amidst market volatility, all eyes are on the Union Budget 2025. Experts expect the government to maintain fiscal prudence and announce measures to boost consumption and support growth. However, Experts warn that if the Budget remains populist, like the last one, it may disappoint the market and may cause further downtrends.

Oil Prices Rising

According to a Reuters report, oil prices hit their highest level in more than three months on Monday’s open. The rise in oil prices has been driven by expectations that the US sanctions will affect Russian crude supplies to the world’s top importers, China and India. The Biden administration on Friday imposed its broadest package of sanctions yet targeting Russia’s oil and gas revenues. This is an attempt to give Kyiv and the incoming administration of Donald Trump leverage to reach a deal for peace in Ukraine,” reported Reuters.

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