Stock Market Crashed On Feb-14: Why Sensex Dropped 700 Pts, Nifty Fell 257 Pts On Valentine's Day?

Stock Market Crashed: Although the new deals between India - US comes as a positive factor, the Indian stock market witnessed yet another intense bearish trend on Friday, February 15. Sensex dropped by nearly 700 points, while Nifty 50 shed over 256 points. Among few key reasons that are dragging Indian equities, is the Trump's stubborn stance of reciprocal tariff, consistency in FIIs sell-mode and strengthening of dollar and bond yields.

Sensex, Nifty:

Sensex nosedived by 699.33 points to hit an intraday low of 75,439.64, at the time of writing. Stocks like Adani Ports, Sun Pharma, Ultratech Cement, IndusInd Bank, NTPC,M&M and Axis Bank dropped by 2% to 4%, emerging as top bears. Majority of heavyweight stocks had plunged.

Meanwhile, Nifty 50 fell by 256.55 points to hit an intraday low of 22,774.85. Bank Nifty dropped by 583 points. India's volatility index is up 4%. Further, Nifty Midcap 100 and Nifty SmallCap 100 index dipped by 3% each.

All sectoral indices were in red with healthcare, media, metal, PSU Banks, Consumer durables and oil & gas stocks taking the worst hit.

During the joint press conference, Trump and Modi agreed to more than doubling total bilateral trade to $500 billion by 2030. This is expected to promote growth that ensures fairness, national security and job creation.

Further, the leaders committed to breaking new ground to support and sustain the overseas deployments of the U.S. and Indian militaries in the Indo-Pacific. Also, Trump and Modi reaffirmed their unwavering commitment to a dynamic defence partnership spanning multiple domains. The duo announced a new ten-year Framework for the U.S.-India Major Defense Partnership in the 21st Century.

The US welcomed India's latest move of lowering tariffs on US products, while both vowed to strengthen and deepen bilateral trade across the goods and services sector and will work towards increasing market access, reducing tariff and non-tariff barriers.

Then why the market is still struggling?

Explaining in detail, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, early indications from the Modi-Trump talks are positive from the market perspective. However, he added, the threatened reciprocal tariffs have been delayed leaving room for further negotiations and a possible deal.

Vijayakumar believes India's willingness to buy more oil & gas from the US can help reduce the trade deficit with the US. Even though Trump is unlikely to back down on reciprocal tariffs, India is treated as a friendly country and the bonhomie between the two leaders augurs well for India.

Then what is sparking bears? The analyst believes market has the potential to bounce back in the near term. However, to fetch a sustained rally, there is a need for reversal in FIIs selling stance and weakening in dollar and bonds.

According to Vijayakumar, the oversold market can bounce back in the near-term but a sustained rally is unlikely since the FIIs continue to be on sell mode. Only a decline in dollar and US bond yields will turn the FIIs into buyers. So watch out for this space.

As per Stock Edge data, FIIs have sold about Rs 87,374.66 crore worth of Indian equities in January 2025, and February 2025 witnessed similar trend. So far in the current month, FIIs have pulled out Rs 24,888.74 crore from stocks.

Noteworthily, the shocks of FIIs selling mode has been compensated by strong buying from DIIs. Domestic institutional investors have been buyers since August 2023. In the new year, DIIs invested about Rs 86,591.80 crore in January 2025, and bought up to Rs 21,655.20 crore so far in February 2025.

Lastly, Vijayakumar said, "The ongoing divergence in the market's preference in favour of largecaps over mid and small caps will continue. Some of the top holdings in small cap mutual funds now are mega caps."