Indian markets crash sharply amid Trump's uncertain tariff plan

Indian equity markets crashed sharply on Tuesday following U.S. President Donald Trump's announcement of trade tariffs on neighboring countries shortly after taking office. Indices made an optimistic start, but failed to hold momentum and remained lackluster as concerns over weak corporate earnings dampened sentiments. 

Some of the important factors for the markets:

Foreign fund outflows hit domestic sentiments: On January 20, FIIs/FPIs net sold India stocks worth Rs 4,336.54 crore. Thus far in January, FPIs have sold stocks worth Rs 48,023 crore. 

Concerns amid weak Q3 earnings: Shares of Zomato declined on reporting 57% fall in Q3 consolidated net profit. Dixon Technologies’ shares also plunged after reporting a sequential decline in consolidated net profit and revenue for the December quarter.

Profit booking in heavyweights: The heavyweights like Reliance Industries, SBI, Bajaj Finance, ICICI Bank, HDFC Bank, Bharti Airtel and Maruti Suzuki witnessed a fall on Tuesday.

Sugar sector stocks were in focus:  A private report indicated that sugar prices hit their lowest in more than three years on January 20 amid reports that India will allow 1 million metric tons of sugar exports in the current season that runs through to end-September. 

Global front: European markets were trading mostly in green, after Greece's current account deficit declined in November due to an improvement of the services balance and the primary income account. The data from the Bank of Greece showed that the current account gap fell by EUR 31.8 million year-on-year to EUR 3.2 billion in November. Asian markets were trading mostly in green, after the Malaysian foreign trade surplus increased sharply in December from a year ago as exports grew faster than imports.

Finally, the BSE Sensex plunged 1235.08 points or 1.60% to 75,838.36, and the CNX Nifty was down by 320.10 points or 1.37% to 23,024.65.    

The BSE Sensex touched high and low of 77,337.36 and 75,641.87 respectively. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell by 2.00%, while Small cap index was down by 1.94%.

The top losing sectoral indices on the BSE were Realty down by 4.22%, Consumer Durables down by 3.99%, Consumer Disc down by 2.90%, Power down by 2.63% and Telecom down by 2.52%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Ultratech Cement up by 0.76% and HCL Tech. up by 0.49%. On the flip side, Zomato down by 10.92%, Adani Ports & SEZ down by 3.74%, NTPC down by 3.51%, ICICI Bank down by 2.98% and SBI down by 2.57% were the top losers.

Meanwhile, in a significant step in advancing India-Belgium trade relations, the Commerce and Industry Minister of India, Piyush Goyal, has held bilateral talks with the Belgian Minister of Foreign Affairs, European Affairs, and Foreign Trade, Bernard Quintin, in Brussels. This meeting reinforced the longstanding relationship between India and Belgium, built on shared values of democracy, rule of law and independent judiciary. The two leaders discussed ways to expand economic cooperation, and explored new avenues to advance this partnership.

During the discussions, both leaders acknowledged Belgium’s significant reliance on foreign trade and India’s dynamic, growing economy as key factors for leveraging mutual opportunities. Recognizing the potential of trade as a cornerstone of their partnership, they emphasized the importance of diversifying trade relations and deepening economic diplomacy to achieve sustainable growth. The leaders also discussed the progress of the EU-India Free Trade Agreement (FTA) negotiations and emphasized the importance of prioritizing trade issues to streamline negotiations and strengthen economic ties.

Emerging sectors such as renewable energy, life sciences, infrastructure, digital technologies, and food products were highlighted as key areas of collaboration. Belgium recognized the importance of engaging with India as a strategic partner to diversify its trade relationships. Regulatory barriers, particularly in the approval processes for pharmaceuticals and agri-products, were also discussed, with both sides agreeing to tackle these challenges through continuous dialogue.

The CNX Nifty traded in a range of 22,976.85 and 23,426.30. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Apollo Hospital up by 2.04%, Tata Consumer Products up by 1.23%, BPCL up by 1.05%, JSW Steel up by 0.83% and Shriram Finance up by 0.70%. On the flip side, Trent down by 5.80%, Adani Ports & SEZ down by 3.70%, NTPC down by 3.50%, ICICI Bank down by 2.98% and SBI down by 2.59% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 2.71 points or 0.03% to 8,523.25 and France’s CAC rose 9.62 points or 0.12% to 7,743.12, while Germany’s DAX lost 10.84 points or 0.05% to 20,979.47.

Asian markets settled mostly higher on Tuesday after President Donald Trump held off from imposing sweeping trade tariffs in his first day in office and announced a national energy emergency in order to end the inflation crisis in the United States. Although, he announced plans to impose 25% tariffs on imports from the two major US trading partners Canada and Mexico starting from February 1 and said tariffs on China could hinge on a deal over TikTok's ownership. Hong Kong shares rose, with property developers in focus after reports that officials are taking steps to stabilize operations at China Vanke Co after liquidity stress and uncertainty over its CEO's whereabouts caused turmoil in the firm's bonds and shares last week. Japanese shares gained with expectations the Bank of Japan will raise its key short-term interest rate at the end of a two-day policy meeting later this week.