Mumbai: Indian benchmark indices Sensex and Nifty opened lower on February 24, mirroring a global market downturn triggered by losses in US equities. Investor sentiment took a hit after US consumer sentiment dropped to a 15-month low in February, while inflation expectations surged due to tariff concerns linked to former President Donald Trump’s proposed policies. The resulting uncertainty sent ripples across Asian markets, which also followed Wall Street’s downward trend.

At 9:50 am, the Sensex plunged 708.30 points, or 0.94 percent, to 74,602.76, while the Nifty 50 fell 205.25 points, or 0.94 percent, to 22,580.65. Both indices have now declined by nearly 13 percent from their record highs in late September 2024, weighed down by concerns over slowing earnings growth and escalating trade tensions.

Global uncertainty and FII selling weigh on markets

Market analysts pointed to persistent selling by foreign institutional investors (FIIs) and global economic concerns as key reasons behind the ongoing correction.

"The market is facing headwinds from relentless FII selling and global uncertainties relating to Trump tariffs. The sharp surge in Chinese stocks is another near-term headwind," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. "The ‘Sell India, Buy China’ trade may continue for some time since Chinese stocks continue to be attractive."

US inflation concerns 

Investor sentiment has also been dampened by rising long-term inflation expectations in the US, which may prevent the Federal Reserve from implementing the widely anticipated rate cuts.

"In the US, long-term inflation expectations are rising and, therefore, the expected rate cut by the Fed is unlikely to materialise. The Fed might even turn hawkish, impacting US stock markets. If this happens and the US bond yields start declining, FIIs may cease to be sellers in India and may even resume buying. The near-term scenario is highly uncertain," Vijayakumar added.