Sensex, Nifty 50 tumble as trade war fears wipe out ₹10 lakh crore investor wealth

India's stock market deepened its retreat today, capping a brutal two-day selloff that has erased nearly ₹10 lakh crore in investor wealth.

The stock market is battling a perfect storm of geopolitical tensions, relentless foreign outflows, and pre-budget jitters hammered risk appetite.

The benchmark S&P BSE Sensex has plunged over 1,000 points in two sessions, while the NSE Nifty 50 fell 1% to breach the psychological 25,400 mark, as a perfect storm of geopolitical tensions, relentless foreign outflows, and pre-budget jitters hammered risk appetite.

The selloff accelerated as sentiment soured globally after US President Donald Trump threatened to impose tariffs on eight European nations. The dispute, centering on Trump’s aggressive stance on Greenland, has raised the spectre of a Trans-Atlantic trade war. The EU is reportedly preparing retaliatory tariffs on $108 billion of US goods if Washington proceeds with a 10% levy on 1 February.

“The volatility is likely to continue until clarity emerges regarding the US-Europe standoff,” said V.K. Vijayakumar, chief investment strategist at Geojit Investments. “Since both sides have hardened their positions, the uncertainty will linger.”

Domestically, third-quarter corporate earnings have failed to provide a safety net. Results have been lukewarm, weighed down by the one-time impact of new labour codes, with few positive surprises so far.

Investors are also retreating to the sidelines ahead of Union Budget 2026 on February 1. While the market anticipates measures to boost consumption, fears that fiscal consolidation targets could curtail government capital expenditure are keeping bulls at bay.

As risk-off sentiment takes hold, capital is fleeing to safe havens. Gold and silver prices have surged to record highs, with investors dumping stocks to hedge against the deepening geopolitical fractures and uninspiring domestic growth signals.