Sensex Crashes 800 Points: Investors Lose ₹10 Lakh Crore

The Indian stock market witnessed a sharp selloff on January 27, 2025, as the Sensex plummeted nearly 900 points and the Nifty 50 dipped below the 22,800 mark. This marked a broad-based decline, with significant losses seen across sectors, especially in mid and small-cap stocks.

The Sensex touched an intraday low of 75,267.59 before closing at 75,366.17, reflecting a loss of 824 points, or 1.08%. Similarly, the Nifty 50 fell to 22,786.90 before ending at 22,829.15, down by 263 points, or 1.14%. This is the second consecutive day of losses for the indices.

Market Capitalisation Losses: Investors Lose ₹10 Lakh Crore

The total market capitalisation (m-cap) of BSE-listed firms dropped from ₹419.5 lakh crore to ₹410 lakh crore, resulting in a staggering ₹10 lakh crore loss in a single trading session. This decline follows a cumulative loss of ₹15 lakh crore in the past two days, causing investor anxiety.

Sectoral Losses Across the Board

In terms of sector performance, all major sectoral indices on the NSE closed with losses. Notably, the Nifty Media, IT, Metal, and Pharma indices saw declines of 3-4%. Other major sectors, such as Nifty Bank, Auto, FMCG, and Realty, also recorded significant losses of around 1%.

Key Factors Behind the Selloff

Experts pointed to five key factors contributing to the sharp downturn in the Indian stock market:

1. Budget 2025 Expectations

The upcoming Budget 2025 has become a focal point for investors, who are expecting it to balance fiscal prudence with measures to boost consumption. However, some analysts fear that the budget could have populist measures, and if the government revises its growth guidance downwards or loosens its fiscal discipline, market sentiment could be further dampened.

2. Weak Q3 Earnings

The Q3 earnings for Indian corporates have been weak, with many sectors showing a slower-than-expected recovery, particularly in comparison to global peers. Rising expenses and stagnating growth have only worsened investor sentiment, which was already fragile due to high market valuations and growing global uncertainty.

3. Foreign Capital Outflows

Since October 2024, foreign portfolio investors (FPIs) have been aggressively selling Indian equities, withdrawing nearly ₹2.5 lakh crore from the markets. As of January 24, 2025, the total outflow for the month stood at over ₹69,000 crore. This has increased market volatility and contributed to the selloff seen today.

4. US Federal Reserve’s Policy

The US Federal Reserve (FOMC) meeting scheduled for January 28-29, 2025 is adding to global market concerns. In 2024, the Fed reduced interest rates by a full percentage point, but many experts believe that the rate-cutting cycle has ended, and the Fed may maintain its current policy stance in January. This has created uncertainty, as strong macroeconomic data continues to roll in.

5. Trump’s Tariff Policies

Global markets are also closely monitoring US President Donald Trump’s tariff policies. Trump’s recent threats of imposing tariffs on Colombia and previous actions with Canada and Mexico have heightened global trade concerns. These policies, coupled with the growing US-China trade tensions, have impacted investor confidence, further contributing to the downward market trend.

Conclusion

Today’s market fall highlights how a combination of domestic uncertainties and global macroeconomic factors can trigger sharp selloffs in the Indian stock market. As investors await the Budget 2025, the outcome of the US Fed meeting, and a possible recovery in Q4 earnings, all eyes will be on how these factors unfold in the coming weeks.

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