Stock market crash: Indian stocks witnessed a wave of sales at today’s intraday meeting on February 28, exacerbating pressure on stocks as global trade tensions escalate prompted investors to flee risk-taking assets in favor of safer investments.
In today’s meeting, both Nifty 50 and Sensex fell more than 1%, with their stock at the forefront of sales pressure. The Nifty IT Index tracked the performance of 10 leading IT companies, extending its winning streak in its fifth consecutive meeting, down 4.30% to 37,280, a level not seen since July 2024.
Today’s decline is also the index’s biggest intraday decline since January 27, when it fell 3.36%. All 10 components of the index are currently traded on the red, with technologies Mahindra, Mphasis and Coforge losing up to 6%.
Other index stocks, including Continuing Systems, Wipro, Infosys, TCS, HCL Technologies and Ltimindtree, are currently down 3% to 5%.
The impact of rising trade tensions and inflation problems on IT stocks
Concerns about the slowdown in the U.S. (All Indian IT companies generate substantial revenue) have given investors confidence.
Trade tensions among global superpowers continue to rise, inflation expectations among U.S. consumers continue to rise, and hopes for multiple Fed reductions and decreases gradually decreases in 2025, which is one of the key factors driving a sharp decline in IT stocks.
The Bureau of Economic Analysis announced on Thursday that the second estimate of U.S. gross domestic product (GDP) showed that the economy grew by 2.3% in the last quarter of 2024. The data remained unchanged with the first estimate and were consistent with economists’ expectations.
However, the report also shows that inflationary pressures continue to rise. The preliminary GDP price index rose 2.4%, higher than the initial estimate of 2.2%. Economists expect reading to remain unchanged.
Meanwhile, core PCE (excluding food and energy prices) rose 2.7% in the quarter, surpassing economists’ expectations for a 2.5% rise. Additionally, the initial U.S. unemployed people claim to rise to 224,000 in the week ended February 21, indicating some weakness in the labor market.
American consumers are increasingly concerned about the tariff plan proposed by Donald Trump, which could boost domestic prices. The University of Michigan Consumer Sentiment Index fell to 64.7 in February, with a nearly 10% drop than expected, with consumers experiencing higher inflation due to potential new tariffs.
The five-year inflation outlook in the survey was 3.5%, the highest since 1995. In a new blow, Trump announced Thursday that his proposed tariffs on Mexico and Canada will take effect on March 4.
Trump claims that the two countries have not done enough to curb drug flows across the border. He also said China, which already faces 10% tariffs in the United States, will impose an additional 10% tax.
The unveiling of additional tariffs on Chinese imports raises the risk of Beijing’s retaliation, heightening tensions between the world’s two largest economies. He also threatened to impose a 25% tariff on EU imports.
The Fed also noted Trump’s trade lawsuit, which prompted it to suspend its rate cycle in January. Morgan Stanley recently revised its outlook and now forecasts only 25 benchmarks in 2025 as trade tensions grow.
Disclaimer: The opinions and suggestions given in this article are those of individual analysts. These do not represent the mint’s point of view. We recommend that investors contact certified experts before making any investment decisions.
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