Indian Stock Market Dips: $1 Trillion Lost Amid Tech Sell-Off and Global Trade Tensions

The Indian stock market wrapped up today’s session with little movement, as the headline indices Sensex and Nifty closed nearly unchanged. However, beneath the surface, the Nifty 50 dipped below 22,400, weighed down by intense selling in technology stocks. The Nifty IT Index plummeted over 3%, nearing its lowest level in eight months, marking a second consecutive day of pressure. Meanwhile, mid- and small-cap stocks took a significant hit, adding to the broader unease. Investors are now eyeing key developments, including India’s upcoming Consumer Price Index (CPI) data for February 2025, due later this week. January’s inflation eased to 4.31%, the lowest since August 2024, offering some hope. On the global front, U.S. President Donald Trump’s tariff saga continues to stir uncertainty—after briefly threatening a 50% hike on Canadian steel and aluminium, he settled on a 25% levy effective March 12, following Ontario’s 25% tax on electricity exports to the U.S.

The Indian equity market has endured a brutal four-month slide, shedding over $1 trillion in value since its peak. This steep decline has shrunk India’s slice of the global market cap to just under 3%, down from over 4% last year. The Nifty 200 has slumped 16% in 165 days—an unusually prolonged correction compared to historical dips, which typically resolved within 70 days and averaged 14%. Unlike past downturns tied to global shocks, this one seems rooted in homegrown woes: lacklustre corporate earnings, lofty valuations, and relentless selling by foreign institutional investors (FIIs). In March 2025 alone, FIIs offloaded £18,810.74 crore worth of Indian equities, marking their sixth straight month of exits. The BSE100 firms saw revenue growth slow to a third of 2023’s pace last year, though net profits surged fivefold thanks to shrewd cost-cutting. Yet, as Bank of Baroda’s chief economist Madan Sabnavis noted, weak demand in consumer goods, oil, gas, and steel sectors dragged down overall growth, with brighter prospects hopefully on the horizon.

This isn’t just an Indian story—global markets are reeling too. U.S. equities have lost $4 trillion in market cap, slipping into correction territory with a drop exceeding 10% from December highs. Tech giants like Tesla, which shed $125 billion in a single day, and Apple and Nvidia, both down around 5%, have borne the brunt amid recession fears and trade tensions. Back in India, the persistent Nifty decline since September—a slow grind over six months—stands in stark contrast to the 55-month bull run that preceded it. Yet, amid the gloom, Morgan Stanley offers a lifeline. They’re holding firm on a Sensex target of 105,000 by December 2025, arguing India’s steady earnings growth and attractive valuations—now at their best since the pandemic—make it a standout. With minimal exposure to global manufacturing exports and a strong services sector, India could weather trade disputes better than most. As Ridham Desai of Morgan Stanley put it, sentiment is flashing “strong buy,” and a robust government budget might just turn the tide.