The brutal sell-off on Dalal Street extended into Friday, with both benchmark indices suffering sharp losses as investor sentiment turned increasingly fragile amid mounting concerns over a global trade war and relentless foreign institutional investor (FII) outflows. The S&P BSE Sensex nosedived over 1,400 points, while the Nifty50 slumped below the crucial 22,150 mark, marking one of the worst trading sessions in recent months. The panic-driven sell-off wiped out nearly ₹9 lakh crore in investor wealth, dragging the total market capitalization of all BSE-listed firms down to ₹384.22 lakh crore.
The Sensex tumbled 1,414 points (1.9%) to settle at 73,198, while the Nifty plunged 420 points (1.86%) to close at 22,124. The steep decline was primarily driven by concerns over rising global trade tensions, with fresh reports suggesting that the United States is set to impose a 25% tariff on imports from Canada and Mexico starting next week. Additionally, the prospect of an additional 10% tariff on Chinese goods has sparked fears of retaliatory measures from Beijing, further dampening global market sentiment.
Among the worst-hit sectors in Friday's carnage was the information technology space, with the Nifty IT index witnessing a massive 6.5% plunge. The sector was rattled after tech giant Nvidia’s stock slumped overnight in the US, triggering widespread concerns about the outlook for global technology firms. Major Indian IT stocks, including Tech Mahindra, Wipro, and Mphasis, bore the brunt of the sell-off, sinking to multi-month lows as investors exited risky assets in favor of safe-haven investments.
The sell-off extended beyond the IT sector, with auto stocks also facing significant pressure. The Nifty Auto index tumbled nearly 4%, as investor concerns over weakening demand and global trade disruptions weighed heavily on the sector. Other key sectors, including banking, metals, media, FMCG, pharma, and oil & gas, also recorded sharp declines, with losses ranging between 0.7% and 3.5%.
Commenting on the market meltdown, Vinod Nair, Head of Research at Geojit Financial Services, attributed the decline to a combination of weak global cues and investor jitters over upcoming macroeconomic data. “The national market witnessed a sharp correction as global uncertainty escalated. The primary trigger was the fear of the United States implementing a 25% tariff on imports from Canada and Mexico, alongside an additional 10% tariff on Chinese goods,” Nair explained.
He added that the possibility of tariffs being imposed on the European Union has further fuelled uncertainty, making investors wary about potential disruptions in global trade. “As we navigate through this period of heightened volatility, all eyes will be on India’s upcoming Q3 GDP data, which could provide crucial insights into the strength of the domestic economic recovery and help shape market direction,” Nair added.
From a technical standpoint, market analysts warned that the Nifty has now entered oversold territory, increasing the likelihood of further volatility in the coming sessions. Rupak De, Senior Technical Analyst at LKP Securities, noted that the index suffered a significant breakdown on Friday, shedding more than 400 points in a single session. “The RSI (Relative Strength Index) remains firmly in bearish territory, but it has now entered the oversold zone, indicating that the selling pressure may be nearing exhaustion,” De said.
He further highlighted that the Nifty is expected to find strong support around the 21,800-22,000 zone. “A decisive move above 21,800 could pave the way for a meaningful recovery, but if this level fails to hold, we could see another round of sharp declines,” De cautioned.
As investors brace for heightened volatility, the focus now shifts to upcoming domestic economic data, global market trends, and foreign investor activity. With sentiment turning increasingly fragile, the next few trading sessions will be crucial in determining whether Indian equities can stage a strong rebound or if the ongoing sell-off will deepen further.
