Stock Market Crash: BSE Sensex ends Falls 1,200+ Points, Nifty Nears 23,050 Amid Bearish Trend

The Indian stock market witnessed a huge fall today, January 21. The BSE Sensex plunged by 1,235.8 points, or 1.6%, and closed at 75,838.36. The Nifty 50 also declined by 320.10 points, or 1.37%, to close the day at 23,024.65.

On the day of the start of Trump's second term as President, which would add further stress to the world's markets, the market experienced a sharp fall. News about possible trade tariffs on neighboring countries made a shockwave across the financial world and led to widespread selling.

Key declines in the Sensex were due to falls in the stock prices of ICICI Bank, Reliance Industries, and Zomato. The India VIX spiked over 6% to 17.45 and reflected that further volatility can be seen in the upcoming days. Nifty Smallcap 100 was down 2.28%, Nifty Midcap 100 fell 2.38%, and Nifty Microcap 250 fell by 1.94%.

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The investors saw the wealth decline considerably, with market capitalization dropping by a whopping Rs 8.83 lakh crore. At the end of the day, all BSE-listed companies' aggregate value stood at Rs 424.07 lakh crore.

Expert Reactions to the Market Drop

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market's reaction was a reflection of uncertainty about Trump's economic policies. He said, "Trump's second term has begun, but his policies lack clarity. While he was firm on immigration during his speech, he gave only vague hints about tariffs. His mention of a potential 25% tariff on Canada and Mexico suggests a gradual rollout of this policy."

Sectoral Performance

Both the Realty and Consumer Durables sectors lost over 4%. Nifty Bank, that monitors 12 banking stocks fell by 779.90 points or 1.58%, to end at 48,570.90. Others, like Nifty Auto, IT, Pharma, PSU Bank, Private Bank, and Oil & Gas had a percentage decline between 1 and 2%.

Main Factors That Led To Market Crash

According to Vinod Nair, head of research at Geojit Financial Services, the market factors that caused this slump are due to the announcement of trade tariffs by US President Donald Trump on his first day back in office. It created a degree of uncertainty in the global market. Weak corporate earnings for the third quarter and the Indian rupee devaluation further intensified the pressure as foreign investors started pulling out funds.

He further added that expectations of a hike in interest rates by the Bank of Japan were weighing on investor sentiment. "The Realty sector suffered due to disappointing pre-result updates, while the banking sector was under stress from rising asset quality issues," he added.

Outlook for Tomorrow

LKP Securities technical analyst Vatsal Bhuva said, "Nifty started on a positive note but faced heavy selling near its 14-day EMA. It closed just above the critical support level of 23,000 but below its consolidation range, forming a long bearish candlestick.

He further stated that the RSI indicator is at 36, indicating bearish momentum. This shows that the market has more to go down before it reaches the oversold zone.

Bhuva predicted that if Nifty closes below 23,000, it might go down to 22,500. On the upside, resistance levels are at 23,300 and 23,500. He advised caution, and told investors to adopt a "sell-on-rise" strategy until the index shows signs of recovery.
The next few days will be crucial for investors as global and domestic factors will continue to affect market sentiment.

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