Indian Equity Markets Open Lower Amid Global Uncertainty

Benchmark equity indices, the BSE Sensex and Nifty50, opened on a weaker note on Friday, February 28, 2025, reflecting mixed global cues. At the opening bell, the BSE Sensex declined by 519.70 points, or 0.70%, to 74,092.73, while the Nifty50 fell by 171.05 points, or 0.76%, to 22,374.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that stock markets generally react negatively to uncertainty, which has intensified following Donald Trump’s election as U.S. President. He noted that a series of tariff announcements by the Trump administration has impacted market sentiment, with the latest confirmation of a 10% tariff on China reinforcing concerns that the U.S. may impose additional trade restrictions before negotiating favorable settlements.

Vijayakumar emphasized that the response from China remains uncertain, and while markets have yet to fully factor in the possibility of a U.S.-China trade war, the probability of such a scenario remains low. However, rising uncertainty is evident in the sharp surge of the CBOE Volatility Index (VIX), which climbed to 21.13.

Looking ahead to March, Vijayakumar anticipates a potential recovery in the Indian equity markets, supported by improving macroeconomic indicators and a slowdown in foreign institutional investor (FII) outflows. He noted that large-cap valuations appear fair, particularly in certain sectors, making them attractive for long-term investors. He suggested that investors could capitalize on market weakness to accumulate quality large-cap stocks and selectively invest in broader market segments such as the defense sector.

Global Market Trends

Global markets witnessed sharp declines following U.S. President Donald Trump’s confirmation that tariffs on Canada and Mexico would take effect next week. In a statement on Thursday evening, Trump announced that these tariffs would be implemented from March 4, alongside an additional 10% tariff on China. He also warned of a possible 25% tariff on imports from the European Union in the near future.

As a result, Asian markets experienced significant losses. Japan’s Nikkei plunged 2.7%, South Korea’s Kospi dropped 2.2%, and Australia’s ASX200 declined by 0.7%. Meanwhile, Wall Street also closed lower overnight, with the S&P 500 falling 1.59%, the Nasdaq Composite dropping 2.78%, and the Dow Jones Industrial Average slipping 0.45%. The Nasdaq’s decline was further exacerbated by an over 8% drop in Nvidia’s shares, adding to market volatility.

With ongoing geopolitical and economic uncertainties, market participants are expected to remain cautious in the near term while closely monitoring policy developments and global trade negotiations.