On Tuesday, the stock market had a very volatile day. Sensex had a range of more than 1200 points today. The BSE Sensex closed at 75,838, while the Nifty50 is dipping deep below 23,000. One of the most significant reasons for this rout was the threats given by the US president, Donald Trump regarding tariffs.

What Caused the Scene?

India’s stock markets today have taken a massive plunge and there are quite a few factors responsible for the sell off. Let us analyse what happened:

Trump Tariff – Sector 232

The newly-appointed president trump has aroused a great deal of panic among investors with his trade tariff strategies. With tenders marked for the imposition of tariffs under the new US policies, market volatility is dramatically escalated.

Decline in Heavyweights

The entire heavyweights have nosedived while trading today. Zomato losing the most 11% on the BSE. It was not just Zomato, but other leaders such as ICICI Bank, HDFC Bank, Reliance and SBI also fell down drastically.

Lackluster Q3 Earnings

A ndian markets have faced the disappointment of yet another earnings season. The bulk of the companies have announced their Q3 results below expectations again. Only a handful of companies managed to outperform estimates.

According to a Bloomberg consensus estimate, the earnings per share (EPS) of Nifty50 companies are likely to increase only marginally, by less than 3 percent year-on-year in the third quarter. In fact only the capital goods, health care, and telecoms are expected to achieve double digit profit increase – other sectors have failed to impress.

Surging Volatility

The session has revealed a significant increase in volatility due to investor apprehension. Rate-cutting uncertainty regarding when Trump’s tariffs will be announced has kept the market in a wait-and-watch mode leading to greater uncertainty and market volatility.

“Trump should have instituted his tarifs because that volatility would have provided some clarity on impacted areas. The current situation, with no specifics, requires investors to be careful and contributes to longer term volatility rather than speed, which is really why analysts think it is not going away any time soon,” an analysts tracked policies-changing public plans complained.

FII Equity Selloff Accelerates

The prolonged selling episode from foreign institutional fmvestors (FIIs) has created even more distressing. FIIs have withdrawn from the market in aggregate equity holdings to the tune of equity worth Rs 48,000 crore until 20th January.

A confluence of international uncertainties, disappointing earnings, and fickle emotions of the investors have made the future journey of Dalal Street difficult.