Stock market crash: Equity investors lose Rs 16.97 lakh crore in just 5 days - top reasons BSE Sensex, Nifty50 have crashed

TOI Business Desk / TIMESOFINDIA.COM / Feb 11, 2025, 17:31 IST

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Stock market crash: Indian equity benchmarks, BSE Sensex and Nifty50, have plunged around 3% over five sessions due to poor domestic earnings and US trade policy concerns.

Stock market crash: Equity investors lose Rs 16.97 lakh crore in just 5 days - top reasons BSE Sensex, Nifty50 have crashed

Stock market crash: In a span of five trading sessions, equity investors suffered losses amounting to Rs 16.97 lakh crore. (AI image)

Stock market crash: BSE Sensex and Nifty50, the Indian equity benchmark indices, have crashed around 3% in the last five trading sessions. It's been a bloodbath on the Dalal Street with major stocks in red and the stock market in free fall. Poor domestic earnings results and US trade policy worries have affected market sentiment negatively.
Indian equity markets fell on Tuesday, with banking, auto, metal and IT sectors leading the decline. In a span of five trading sessions, equity investors have suffered losses amounting to Rs 16.97 lakh crore, triggered by continuous foreign fund withdrawals and new US tariff impositions that sparked trade conflict concerns. The BSE benchmark index has declined by 2,290.21 points, representing a 2.91 per cent drop during this period.
The overall market value of companies listed on the BSE decreased by Rs 16,97,903.48 crore, reaching Rs 4,08,52,922.63 crore (USD 4.70 trillion) over these five sessions, reflecting the downward movement in equity shares.
The single trading session on Tuesday witnessed a substantial erosion of Rs 9,29,651.16 crore in investors' wealth.

Why BSE Sensex, Nifty50 have crashed

According to Vinod Nair, Head of Research, Geojit Financial Services, the ongoing uncertainty surrounding US trade policies and tariffs, coupled with domestic economic growth concerns and persistent selling by FIIs, is dampening market sentiment.
“The mid- and small-cap stocks experienced significant declines due to demand concerns and higher valuations. Although the RBI’s intervention provided some recovery for the rupee from yesterday's record low, it remains under pressure and is likely to keep the market volatile in the near term. Investors are anticipating the PM’s visit to the US for any potential relief in trade uncertainty, while the US inflation data later today will also be a key focus,�?he said.
Below are some of the factors for the stock market crash over the last few trading sessions:
1) US Steel and Aluminium Tariff Increase
US President Donald Trump on Monday announced a uniform 25% tariff on steel and aluminium imports "without exceptions or exemptions". This decision aims to support struggling domestic industries but risks triggering a broader trade conflict.
Trump cancelled all country-specific exemptions, quota arrangements and product-specific tariff exclusions. A White House official confirmed the new policy will be effective from March 4. The 25% rate will apply to imports from Canada, Brazil, Mexico, South Korea and other previously exempted nations.
"It's 25% without exceptions or exemptions. That's all countries, no matter where it comes from, all countries," Trump explained to reporters, emphasising the simplified tariff structure.
"Trump's latest decision to impose 25% tariffs on steel and aluminum will impact countries like Mexico, Brazil, South Korea, and Vietnam the most. Metal prices will remain soft for a long time," said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2) Market Anxiety Before Powell's Address
Traders and investors remain cautious as Federal Reserve Chair Jerome Powell prepares to address the Senate Banking, Housing, and Urban Affairs Committee. The financial community will analyse his statements on tariffs and inflation to understand potential shifts in monetary policy direction.
3) Ongoing Foreign Investment Outflow
According to NSDL data, foreign institutional investors have withdrawn $9.94 billion from Indian equities in the current year, adding pressure to market performance.
4) Rising Yields and Currency Impact
The U.S. 10-year Treasury yield is positioned at 4.495%, whilst the 2-year yield registers 4.281%. The robust dollar performance, evidenced by the dollar index at 108.36, has triggered capital departures from emerging markets, including India. The elevated U.S. bond yields enhance the appeal of American investments, whilst the strengthened dollar increases overseas capital expenses, affecting market sentiment negatively.

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The TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.

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