Monday blues for stock markets! Reasons why Sensex, Nifty are falling today

Why are markets falling: A sustained selling by foreign investors, a falling rupee, weak December quarter results, Budget nervousness, China's DeepSeek, and Trump's tariff war is hurting the sentiment

Stock market crash, stock market today: India stock markets were crashing on Monday, January 27, 2025, as investors dumped almost anything and everything on the bourses. The BSE Sensex index today fell 842.5 points in the intraday trade to hit a low of 75,348 level. The Nifty50 index price, on the other hand, touched a low of 22,826.8 on the National Stock Exchange (NSE), down 265.4 points.

 

Large-cap stocks like Power Grid, Tata Motors, Zomato, IndusInd Bank, HCL Tech, Tech M, TCS, Bharti Airtel, Infosys, Reliance Industries, L&T, Bajaj twins, and HDFC Bank were down in the range of 1 per cent to 3.6 per cent.

 

 

In the broader market, the bear attack was more brutal with the Nifty MidCap index plummeting 2.7 per cent intraday and the Nifty SmallCap index 4 per cent.  CreditAccess Grameen, Netweb Technologies India, Newgen Software Technologies, Alldigi Tech, Dhani Services, Tejas Networks, Solara Active Pharma Sciences and K P Energy, all constituents of the smallcap index, have tanked between 10 per cent and 18 per cent in intra-day trades so far today. READ MORE

 

Stock market breadth was extremely weak with over 3,300 stocks declining on the BSE as against just 490 advancing stocks. The market capitalization of all the BSE listed companies fell to Rs 411.3 trillion as of 10:55 AM.

 

According to analysts, a sustained selling by foreign investors, coupled with a falling rupee, weak December quarter results, Budget nervousness, and Trump’s tariff war is hurting the sentiment.

Here is a list of reasons why stocks markets are falling today:

Dow Futures, Nasdaq Futures sink:

Futures of US stock market indices – Dow Jones, S&P500, and Nasdaq Composite – were reeling under pressure on Monday ahead of the quarterly results presentation by Wall Street tech giants like Meta Platforms, Microsoft, Tesla, and Apple this week.

 

At the time of writing this report, Dow Jones Futures were down 200 points (0.45 per cent), S&P500 Futures 64 points (1 per cent), and Nasdaq Futures 440 points (2 per cent).

 

DeepSeek seeds fear; Chip stocks fall

Notably, as investors eye the tech giants’ artificial intelligence (AI) prowess during the quarterly results this week, news from China is denting investor sentiment.

 

China-based DeepSeek launched a free, open-source large-language model in late December, developed allegedly in only two months at a cost of less than $6 million. Last week, the lab launched r1, a reasoning model that surpassed OpenAI’s newest o1 in several third-party tests.

 

Consequently, chip-related in Asia, especially Japan, came under heavy selling pressure on Monday. The share price of semiconductor testing equipment supplier Advantest, which counts Nvidia among its clients, fell 7.99 per cent. Tokyo Electron dropped 3.94 per cent, Renesas Electronics 0.4 per cent, and Softbank Group, which owns chip designer Arm, slid 5.4 per cent.

 

Back home, the Nifty Information Technology (IT) index declined 2 per cent with Persistent Systems share price down 3.5 per cent, LTIMindtree 3.3 per cent, HCL Tech share price 2.45 per cent, Coforge share price 2.4 per cent, LTTS share price 2.39 per cent, Wipro share price 2.34 per cent, and Tech M share price 2.15 per cent.

 

Donald Trump’s tariff war threat:

A flurry of tariff threats between the US and Colombia, over repatriation of migrants from the US, hit investor sentiment.

 

Early on Sunday, Colombian President Gustavo Petro rejected US military planes from landing, stating the US “can’t treat Colombian migrants like criminals”. In retaliation, newly-elected US President Donald Trump ordered “emergency 25 per cent tariffs” on all imports from the country (to be raised to 50 per cent in a week), a ‘travel ban’ for Colombian citizens, and a revocation of visas for Colombian officials in the US. In response, Petro threatened a 25 per cent retaliatory tariff increase on the US.

 

However, recent reports suggest, the US and Colombia had agreed to the “unrestricted acceptance” of migrants from Colombia and would allow them to be returned to the country “including on US military aircraft, without limitation or delay.”

 

“One of the major concerns for markets is that President Trump is coming up with new threats like the 25 per cent tariff on Columbia for its refusal to take back deported illegal immigrants. The threatened 25 per cent tariff on Canada and Mexico might be implemented from February 1 onwards. Therefore, will Trump walk his talk on other threats including tariffs on China and other countries, is a question that is being asked in economic and market circles now. These concerns are weighing on the markets,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

FPI selling, Rupee depreciation

The Indian Rupee hit a record low of 86.44 per US dollar on Monday, depreciating 22 paise against the greenback amid Trump’s tariff threat.

 

A weak rupee makes investment in Indian securities expensive for foreign investors, forcing them to offload the assets. Foreign portfolio investors (FPIs) have already withdrawn Rs 64,156 crore ($ 7.44 billion) from Indian equities thus far this month.

Nervousness ahead of Union Budget 2025

The Union Budget for financial year 2025-26 (FY26) is slated to be presented this week on Saturday, February 1, 2025. Analysts, however, think investors have low hopes from Budget 2025 as limited fiscal headroom, they believe, leaves little room for economic stimulus.

 

According to analysts, the stock markets are approaching the Budget with scepticism as they watch out for areas like the extent of fiscal consolidation, the delta in spending on physical and social infrastructure, and sector-level incentives. READ MORE

 

US Federal Reserve’s monetary policy meeting

After being on a rate cutting spree, market watchers expect the US Federal Reserve to hold key interest rates during this week’s policy meeting, which is scheduled for January 28 and 29.

 

As per the CMIE Group’s FedWatch tool, financial markets are pricing in near certainty that the Fed will keep the fed funds rate at a range of 4.25 per cent to 4.50 per cent.

Levels to watch on Nifty50

According to analysts at Axis Securities, the short-term trend for the Nifty index remains bearish. The trend-deciding level for the day is 23,163. If the Nifty index stays below 23,163 level, it may witness profit booking till 22,979-22,866-22,682 levels.