After Historic Budget 2025, Why is Stock Market Under Pressure? Check Top Reasons Here

The Indian stock market faced a rough start despite a well-received Budget 2025. On February 3, just two days after the Budget announcement, the Sensex opened with a significant decline in the early session before showing some recovery by midday. The key factor behind this stock market turbulence was rising global tensions, especially US President Donald Trump’s decision to impose hefty tariffs on imports from Canada, Mexico, and China.

Sensex Opens with a Gap Down, Share Market Witnesses Heavy Selling

At the opening bell, the Sensex plunged by 710 points, or 0.88%, reaching 76,821.50. The broader NSE market also reflected this decline, with Nifty Metal and Nifty Realty emerging as the worst-performing sectors. As the trading session progressed, the stock market attempted a recovery but remained in negative territory. By 3 PM, the Sensex had recovered slightly but was still down by 409 points, while the Nifty 50 recorded a 122-point drop.

Global Markets in Turmoil Amid Trump’s Tariff Announcement

The ripple effect of Donald Trump’s aggressive trade policies was visible across global markets. Key Asian indices also reflected this downturn:

Hong Kong’s Hang Seng Index fell by 1.3%.

Japan’s Nikkei 225 dropped 2.4%.

South Korea’s KOSPI plunged 3%.

Australia’s ASX 200 declined by 1.8%.

The global stock market downturn was triggered by Trump’s announcement of a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods, starting the following Tuesday. Additionally, he hinted at imposing fresh tariffs on goods from the European Union. These aggressive trade policies sent shockwaves through financial markets, leading to a widespread sell-off.

Rupee Hits a Record Low, Foreign Investors Continue to Sell

The Indian rupee opened at a record low, breaching the 87 per US dollar mark for the first time in history. The dollar strengthened against major global currencies following Trump’s tariff move, adding pressure to emerging markets like India.

Foreign Institutional Investors (FIIs) have also played a key role in the ongoing stock market decline. Since October 2024, FIIs have consistently offloaded Indian equities, causing a sharp dip in investor confidence. This continuous selling pressure has contributed to the Nifty 50’s repeated monthly declines.

RBI’s Monetary Policy Decision Now in Focus

With the Union Budget behind, investors have now shifted focus to the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting. Finance Minister Nirmala Sitharaman introduced significant income tax relief measures in the Budget to boost consumption. Experts predict that the RBI may offer additional support by announcing a 25 basis points rate cut in its upcoming policy review.