Trade war fears spook markets: Sensex, Nifty take a hit as rupee weakens

Benchmark stock market indices closed lower on Monday, as the rupee hit a record low, denting investor sentiment due to the ongoing tariff war.

The S&P BSE Sensex tanked by 319.22 points to end at 77,186.74, while the NSE Nifty50 lost 128.85 points to close at 23,353.30.

Stock market fell by nearly 1% in early trade, resulting in close to Rs 5 lakh crore loss in investor wealth, with the Sensex plunging close to 750 points. However, the indices recovered in the afternoon session to close 0.5% lower.

Vinod Nair, Head of Research, Geojit Financial Services said that the global market got unsettled amid the onset of the 'Trade War,' as tariff conflicts between the US and other nations are unlikely to yield any economic benefits.

"Instead, it may cause challenges to the global economy, heightening global financial risks. International trade, which had flourished under the framework of globalisation, now faces threats from the new protectionist policies. Front and contour tariffs are expected to make the world less efficient and elevate global inflation & interest rates," he added.

Another major trigger for the market decline was the declining rupee, which hit its all-time low as foreign investors continued to sell.

VLA Ambala, Co-Founder of Stock Market Today said that the rupee has weakened further and traded at a record low against the USD at 87.17.

"This depreciation has shaken foreign investors' trust in our nation’s economic stability, adding to their apprehension about India’s high stock valuation. January recorded the second-highest FII offloading in a month amounting to Rs 87,374.66 crore, after Oct 2024’s INR 114,445.89 crore, and so far in February FIIs have sold INR 1,327.09 crore and purchased stocks worth only Rs 165.26 crore. The rising global trade concerns and policy uncertainties suggest that this selling momentum could continue," she added.

Bajaj Finance topped the gainers' chart on Nifty50 with a rise of 4.47%, while Mahindra & Mahindra advanced 2.91%.

IT major Wipro gained 2.84%, followed by telecom giant Bharti Airtel which added 2.03%. Two-wheeler manufacturer Eicher Motors rounded off the gainers with a 1.93% increase.

On the losing front, infrastructure major Larsen & Toubro saw the steepest decline, dropping 4.68%. Oil and Natural Gas Corporation fell 4.31%, while Bharat Electronics Limited declined 3.78%.

State-owned Bharat Petroleum Corporation shed 3.38%, and Hero MotoCorp slipped 3.32%. The day's trading pattern reflected investors' preference for financial and technology sectors, while banking, FMCG, metal, infrastructure and energy stocks remained under pressure.

"On technical charts, Nifty formed a Bullish Pin Bar in the latest session, but the index is still away from its key support. In this situation, I suggest following a sell-on-rise approach," said Ambala.