SENSEX tanks 710 pts, NIFTY50 below 25,750: Trump’s tariff warning to Fed uncertainty; key factors behind the market rout

The Indian stock market remained under pressure on Tuesday, December 9, as mid- and small-cap stocks extended their decline, and weakness across all sectoral indices further weighed on sentiment.

The market breadth stayed weak, with 2,856 stocks trading on the NSE in early deals—only 449 advanced, while 2,340 declined and 67 remained unchanged.

Meanwhile, only 8 stocks hit their one-year highs in the early trade, while 397 stocks touched their 52-week lows.

Here are the factors behind the market fall on Tuesday

The decline in the market follows comments from US President Donald Trump hinting at potential new tariffs on Indian rice, raising concerns that trade negotiations between the two countries may remain unsettled.

At a White House roundtable, Trump stated that tariffs would be used aggressively to protect American farmers, which weighed on sentiment for Indian rice stocks.

Speaking at the session with farmers, lawmakers, and senior cabinet officials on Monday, Trump said his administration would provide “$12 billion in economic assistance to American farmers,” funded by tariff revenues collected from trading partners. He added that the country was bringing in significant amounts of money through these tariffs, claiming that other nations had “taken advantage of us like nobody’s ever seen.”

During the meeting, one of the representatives told Trump that rice producers in the southern part of the country were "really struggling” and that other nations, especially India and Thailand, were "dumping" rice into the US.

"They shouldn't be dumping," Trump said. "I mean, I heard that; I heard that from others. You can't do that."

Trump’s new tariff threat comes months after the US administration imposed a 50% duty on Indian goods, including a 25% punitive tariff over India’s purchase of cheap Russian oil.

Further, as per reports, a quarter-point rate cut is widely expected when the two-day meeting ends on Wednesday. However, the tone of the statement remains uncertain, along with the economic projections.

Globally, most of the Asian markets were trading lower as investors turned cautious about the pace of easing by the Federal Reserve beyond this week's expected rate cut.

Hong Kong's Hang Seng declined 0.85%, Taiwan Weighted declined 0.29%, South Korea's KOSPI fell 0.68%, and China's Shanghai Composite tumbled 0.13%, while Japan's Nikkei was trading 0.32% higher.

On Wall Street, major indices ended lower on Monday, with most S&P 500 sectors slipping, as Treasury yields climbed and investors awaited the Federal Reserve’s monetary policy decision due in two days.

The S&P 500 index declined 0.35%, the Dow Jones Industrial Average fell 0.45%, and the tech-heavy Nasdaq dropped 0.14%.

The foreign fund outflows continue to worry market investors. In the first week of December, the foreign investors have pulled out ₹11,820 crore from Indian equities, primarily driven by the sharp depreciation of the rupee.

According to exchange data, on Monday, the foreign institutional investors (FIIs) sold shares worth ₹655.59 crore, while the domestic institutional investors (DIIs) bought equities worth ₹2,542.49 crore on a net basis.

The rupee depreciated 10 paise to 90.15 against the US dollar in early trade on Tuesday, as dollar demand from corporates, importers and foreign portfolio investors dented investors' sentiments.

At the interbank foreign exchange, the rupee opened at 90.15 against the US dollar, down 10 paise from its previous close. On Monday, the rupee settled at 90.05 against the US dollar. The market is focused on the stance the US Federal Reserve Chief Chairman Jerome Powell will deliver in the US FED meeting this week.

Except for Nifty PSU Bank (0.33%) and Nifty Consumer Durables (0.05%), all the sectoral indices were trading lower.

Dragged by Coforge (-3.92%), Persistent Systems (-1.64%) and TCS (-1.5%), Nifty IT took the lead among the losers’ pack, slumping 1.53%.

Further, Nifty Media (-1.36%), Nifty Metal (-0.71%), Nifty Auto Durables (-0.7%), Nifty Pharma (-0.47%), and Nifty Oil and Gas (-0.34%) were the other top sectoral losers.

As many as 41 stocks advanced, while only 9 declined in the opening session on the NIFTY50 index.

Asian Paints was the biggest laggard, tumbling 3.87%, followed by TCS (-1.5%), Infosys (-1.45%), Wipro (-1.37%) and Jio Financial Services (-1.31%).

On the flip side, Eternal (0.93%), Bharat Electronics (0.85%), Titan Company (0.73%), Grasim Industries (0.56%) and Shriram Finance (0.44%) were the top gainers on the 50-share index.