The Indian stock market witnessed a significant drop on March 10, 2025, as a combination of global uncertainties, domestic challenges, and cautious investor sentiment weighed on equities. Concerns over a potential global economic slowdown, rising trade tensions, and foreign investor outflows contributed to the downturn.
On the global front, escalating U.S. tariffs on major trading partners, includng China, Canada, and Mexico, have raised fears of a trade war that could disrupt global supply chains. Additionally, signs of deflation in China indicate weakening economic activity, leading to concerns over reduced global demand, which could impact Indian exports. Meanwhile, volatility in the U.S. stock market, fueled by uncertainties around Federal Reserve policies and sustained high interest rates, created a ripple effect across global markets, further dampening investor sentiment in India.
Domestically, Foreign Institutional Investors (FIIs) pulled out ₹485.41 crore from Indian equities, adding selling pressure. At the same time, Domestic Institutional Investors (DIIs) remained net buyers, infusing ₹263.51 crore into the market, though it was not enough to offset the overall decline. A weakening rupee further heightened concerns, as it raised import costs and inflationary risks. Additionally, weaker-than-expected corporate earnings in key sectors prompted caution among investors.
Market-specific factors also played a role in today decline. After a prolonged period of high valuations, the market was due for a correction, and the prevailing uncertainties acted as a trigger. A reduced risk appetite among investors was evident in shrinking margin trading funds, leading to increased selling pressure.
At market close, broader indices reflected the downtrend. The NIFTY MidCap 50 fell 1.53% to 13,708.40, while the NIFTY SmallCap 50 experienced a steeper decline of 2.01%, closing at 7,329.95. On the BSE, the MidCap index dropped 1.46% to 39,306.68, while the SmallCap index recorded a larger decline of 2.11%, settling at 44,644.98. The market saw significant intra-day volatility, with the SmallCap index hitting a low of 44,524.35 and the MidCap index touching 39,200.74.
Adding to the uncertainty, recent comments by U.S. President Donald Trump about a possible recession in the U.S. further unnerved investors, leading to risk-off sentiment globally
Disclaimer: The views expressed in this article are those of the author and are based on available data and market observations. This is not intended as investment advice. Investors should conduct their own research or consult a financial advisor before making any investment decisions.