Why Indian Stock Market Falling Continuously?

On Friday, 28 February 2025, the Indian Stock Market once again opened in red for investors. This decline has been the longest losing streak since 1996. Almost erasing nearly $1 trillion in investor wealth has been erased over the last few months.

There are several reasons for the market downfall, including global and domestic. If you wonder why the Indian stock market is experiencing a continued decline, this article is for you.

Global Trade Uncertainty – Indian Stock Market expected a spike after Donald Trump took charge as the US President. But Donald Trump’s recent announcement on imposing a 25% tariff on imports from Canada and Mexico from March 4, and additional tariffs on China caused global trade tension. Since it is concerned with a slowing US economy, it hurt global markets, including India.

US Market Correction –The US market witnessed a sharp fall today, which had severe implications for the Indian market. Concerns over the US future economy and new tariffs played its part. The Nasdaq composite fell 2.8%, to 18,544.42. The S&P 500 lost 1.6%, to 5,861.57. The Dow Jones Industrial Average plunged 193.62 points, to 43,239.50.

FII Withdraws – Several Foreign Institution investors have withdrawn close to $25 billion from Indian equities. Almost $4.1 billion was pulled out just in this month alone.

Weak Corporate Earnings – Many companies witnessed lower profits that reduced investor confidence. Also, high valuations and global economic uncertainties paved the way for a considerable decline in market capitalization.

Sector Affected- There has been a significant decline in the information technology (IT) sector. The Nifty IT index experienced a massive downfall. Rising U.S. jobless claims and concerns over inflation resulted in this impact. Most of the IT companies depend extensively on the US market.

Interest Rate & Policy Uncertainty – The Reserve Bank of India’s recent rate cuts and government policies have not yet brought confidence in investors.

Besides these, high inflation rates, rising unemployment, and limited capital expenditure are some of the reasons for current economic challenges.