Falling for the fifth straight session, the Indian equity benchmark BSE Sensex tanked over 800 points in intraday trade on Monday, February 24, amid weak global cues, concerns about a potential trade war between the US and other major global economies, and persistent selling by foreign portfolio investors.
The Sensex opened at 74,893.45, fell by 817.09 points or 1.08% to an intraday low of 74,493.97 on Monday. The NSE Nifty 50, which opened at 22,609.35, touched an intraday low of 22,548.35, down 247.55 points or 1.09%. Across sectors, all the sectoral indices except for Nifty FMCG (up 0.36%), Pharma (up 0.02%), and Auto (up 0.22%) were trading lower, while the Nifty IT index was the top laggard, settling 2.71% lower.
Why the Indian Stock Market is Falling:
Concerns over a potential trade war
US President Donald Trump’s threat to impose reciprocal tariffs on India and China has kept investors on edge. While speaking at the swearing-in of Commerce Secretary Howard Lutnick on Friday, Trump said that his administration would “soon” impose reciprocal tariffs on countries such as India and China. “Whatever a company or a country, such as, let’s say, India or China or any of them, whatever they charge, we want to be fair… so reciprocal. Reciprocal meaning, ‘they charge us, we charge them’,” Trump said in Washington.
Persistent FII selling
Concerns around continued selling of Indian stocks by Foreign Institutional Investors (FIIs) are weighing on market sentiment. FIIs have pulled out over Rs 23,710 crore from the Indian equity markets so far in February, pushing total outflows over Rs 1 trillion in 2025 amid rising global trade tensions. FIIs sold around Rs 78,027 crore in January. The total FII outflow has reached Rs 1,01,737 crore in 2025 so far, according to depository data.
"The market is facing headwinds from relentless FII selling and global uncertainties relating to Trump tariffs," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
China's Surge Sways India
The Chinese stock market has seen a sharp rally in the last few days, further pulling down investor sentiment. The attractive valuation of Chinese stocks and the still stretched valuation of Indian stocks have triggered a flow of money from the Indian market to the Chinese market.
Their economic stimulus package announced in September 2024, which includes policy support, regulatory easing, and measures to boost FII sentiment, has renewed investor confidence in China's recovery narrative.
Vaibhav Porwal, co-founder at Dezerv, says China’s recent rally can be attributed to a blend of factors, with its economic stimulus having an overarching impact on the economy. China has taken steps to stabilise its economy, including rate cuts, property sector support, and liquidity injections. These moves have helped restore investor confidence, particularly after prolonged policy tightening.
“The Chinese stocks have also been heavily discounted due to geopolitical tensions and regulatory uncertainties. India's premium valuation relative to peers like Indonesia, South Korea, and Taiwan has been a headwind,” he added.
Valuation Concerns
While India’s long-term growth story remains strong, near-term valuation worries and concerns over muted corporate earnings have led to profit-booking, experts suggest.
“India continues to trade at a premium compared to other emerging markets, prompting global investors to reassess their positions. Also, a strong dollar often attracts capital to US markets, which are considered safer and more stable. This could have been a factor in FII outflow from emerging markets like India,” Porwal said.
