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From tariff tensions to index heavyweights underperforming, multiple factors have contributed to the fall seen on the Sensex and Nifty in Monday's trading session.
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Indian equities have begun the new trading week on a tough note with the Nifty 50 index declining nearly 200 points, while the Sensex seeing a decline of as much as 700 points. Despite managing to defend lower levels, there remains a continued lack of conviction at higher levels for the bulls. Here are some of the key reasons why the markets are declining on Monday.
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US President Donald Trump has announced tariffs on European allies supporting Denmark against his bid for acquiring Greenland, including the UK. The 10% tariff will take effect from February 1, and rise to 25% in case a deal is not reached by June 1 this year. The resurfacing of the tariff war has sparked a risk-off sentiment across global equities. The Dow futures are down over 350 points, even as the US markets remain shut for trading today due to a holiday. The global risk-off has rubbed off on Indian equities as well.
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Index heavyweights are another major contributor to the fall seen on the Sensex and the Nifty 50 today. Reliance Industries and ICICI Bank are together contributing to 135 points out of the 175-point drop on the Nifty 50 in today's session. Adding to that is the decline seen in IT majors Infosys and TCS, along with HDFC Bank.
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Broader markets have not declined as much as the benchmark index and therefore the overall market cap erosion so far has only been ₹2 lakh crore. There are plenty of stocks reacting to their results within the broader markets. 79 out of 100 Smallcap stocks and 78 out of 100 Midcap stocks are trading with losses.
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So if markets are in risk-off mode, what is doing well? The haven assets. Both Gold and Silver are trading at record highs in the global markets. Even in India, Silver prices crossed the mark of ₹3 lakh per kg in today's session.
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What Next For The Markets? For the Nifty, 25,500 remains a key support level as per the F&O data and the bulls, time and again have managed to defend that level. Tuesday will also be the weekly options expiry and more companies reporting and reacting to results. US markets will remain shut today so global cues will only be limited barring the tariff-related developments.
