U.S. President Donald Trump’s announcement of trade tariffs, Stock market crash
On January 21, 2025, Stock market crash – Indian equity markets experienced a significant downturn, with the BSE Sensex plummeting over 1,200 points and the Nifty50 closing near 23,050. The BSE Sensex concluded the trading session at 75,838.36, down 1,235 points or 1.60%, while the Nifty50 ended at 23,045.30, decreasing by 299 points or 1.28%.
This decline was largely attributed to substantial selling pressures in major stocks, including Reliance Industries, ICICI Bank, and Zomato. Zomato’s shares notably dropped over 11% following a 57% year-on-year decrease in its December quarter net profit, contributing approximately 150 points to the Sensex’s fall. Collectively, losses in Reliance, ICICI Bank, State Bank of India, and Mahindra & Mahindra accounted for an additional 490 points of the decline.
Investor sentiment was further dampened by U.S. President Donald Trump’s announcement of potential 25% trade tariffs on neighboring countries, including Mexico and Canada, set to commence on February 1. This policy shift has introduced global market uncertainties, raising concerns about inflation, potential overheating of the U.S. economy, and the strengthening of the dollar, all of which could adversely impact bond markets.
Additionally, the collective market capitalization of BSE-listed companies decreased by ₹7.48 lakh crore, settling at ₹424.11 lakh crore. The Nifty Consumer Durables index also suffered a 4% decline, reflecting broader market apprehensions.
Market analysts suggest that the combination of disappointing corporate earnings, particularly within the Nifty50 companies projected to show only 3% year-over-year EPS growth, and the ambiguity surrounding U.S. trade policies, has contributed to the heightened market volatility. Sectors such as capital goods, healthcare, and telecom are expected to demonstrate robust profit growth, while metals, chemicals, consumer staples, banks, and oil & gas sectors may underperform.
As the global economic landscape adjusts to these developments, investors are advised to exercise caution and closely monitor policy changes and corporate performance in the coming weeks.
