Market Meltdown: Sensex drops another 1,000 points, declines for fifth consecutive session

Investors faced further pain as India’s equity market extended its losing streak for the fifth consecutive session on Tuesday. Benchmark indices—the BSE Sensex and NSE Nifty50—plunged by over 1.3% each. 

The ongoing bearish trend has wiped out a staggering ₹19 lakh crore in just five sessions, driven by escalating global trade tensions. The latest trigger was US President Donald Trump’s decision to impose a 25% tariff on steel and aluminum imports. Additionally, the continuous outflow of foreign institutional investors (FIIs), the weakening rupee, and disappointing corporate earnings have exacerbated the market’s downturn.

Sensex tumbled as much as 1,018.20 points, or 1.32%, to settle at 76,293.60 on Tuesday. In the past five sessions, the 30-share index has shed 2,290 points. The NSE Nifty50 fell 309.80 points, or 1.32%, to close at 23,071.80. On Tuesday, investors lost Rs 9 lakh crore as the market capitalisation of all BSE-listed firms came down to Rs 409.26 lakh crore from Rs 418.56 crore in the previous session. 

The broader market took a bigger hit with the Nifty Smallcap100 and Nifty Midcap100 indices ending lower by 3.45% and 3.02%, respectively. This segment faces valuation concerns, especially after S Naren, veteran fund manager and CIO of ICICI Prudential AMC, last week warned investors about absurd valuations and urged them to exit small- and mid-cap stocks entirely.

“US President Donald Trump has intensified trade tensions by imposing a 25% tariff on steel and aluminum imports without offering exemptions to countries like Canada, Brazil, Mexico, and South Korea. This protectionist move, aimed at safeguarding American industries, has raised fears of a global trade war, which could adversely affect emerging markets, including India,” said brokerage firm Bajaj Broking.

Economists at global banks such as Morgan Stanley and Nomura Holdings Inc. believe that India and Thailand are most exposed to risks from President Donald Trump’s vow to impose reciprocal tariffs on trading partners.

Bajaj Broking stated that since October last year, foreign investors have been withdrawing funds from Indian equities, largely due to rising US bond yields and a strengthening dollar. The 10-year Treasury yield has advanced to 4.495%, making US assets more appealing to global investors.

FIIs pulled out a massive Rs 88,139 crore from the Indian market so far in CY2025. The selling is accompanied by the Indian rupee hitting new lows against the US dollar. On Tuesday, the rupee touched the Rs 88 mark (against 1 US Dollar) for the first time. 

"The mood is already sombre because of likely prospects of subdued government spending going ahead and dismal earnings show so far which has created uncertainty amongst the investors and prompted them to offload their equity holdings,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

Amid the growing uncertainty, hopes are now pinned on Prime Minister Narendra Modi’s upcoming visit to the US, with investors anticipating some relief in the face of mounting global trade concerns.