Why Is India’s Stock Market Falling Continuously? Are Tariffs and Visa Fees the Only Reason?

In the past four days, Sensex and Nifty have dropped by nearly 1.5%, causing investors a loss of ₹5 lakh crore. Experts suggest that trade tensions and visa fee hikes are not the only reasons for this slump. Several other factors are also affecting the market. Let’s analyze these reasons in detail.

Ever since U.S. President Donald Trump increased H1B visa fees, India’s stock market has been struggling to maintain momentum. The visa order reignited investor concerns over the trade deal between India and the U.S., intensifying market pressure. In the last four days, the stock market has seen a decline exceeding 1.5%.

Interestingly, the gains created by GST reforms, which had boosted the market, were partially wiped out due to Trump’s decision, leading to significant investor losses.

The question arises: Are the U.S. trade deal and visa hike the only reasons behind the market downturn? While these factors are major contributors, additional pressures are impacting Sensex and Nifty. One key reason is the continuous withdrawal of foreign investments from the stock market. Meanwhile, the rupee is consistently trading near record lows against the dollar.

IT stocks are witnessing substantial pressure. Auto stocks, which surged due to GST reforms, are now seeing profit-booking by investors. Rising crude oil prices and a stronger dollar are other significant factors affecting the market. To understand this better, let’s examine how the market behaved during the first and second halves of September.

September Stock Market Swings

Impact of GST Reforms
September can be divided into two clear phases for the stock market. The first half showed positive momentum, bringing optimism among investors, while the second half triggered renewed concerns. The positive phase began with the GST Council meeting on September 3, where expectations of lower tax slabs drove market momentum.

On September 2, Sensex closed at 80,157.88 points. Following the GST reforms announcement, it surged by 3.56% to reach 83,013.96 points by September 18. Nifty also followed a similar pattern, rising from 24,579.60 points to 25,423.60 points, a 3.43% increase.

Investor optimism was further fueled by statements from Trump, expressing his desire to strengthen ties with India and meet Prime Minister Modi. This raised hopes for reduced tariffs and a favorable trade deal.

Trump Shows His Tough Stance Again
By September 18, the market seemed set for a positive September. However, on September 21, Trump unexpectedly increased the U.S. H1B visa fees to $100,000 (over ₹88 lakh). This hike will raise costs for Indian IT companies operating in the U.S. and for American firms hiring Indian talent. Around 70% of these visas are used by Indians globally.

When the market opened on Monday after this announcement, the impact was immediate and severe. Sensex, which stood at 83,013.96 points on September 18, fell to 81,715.63 points by September 24, marking a 1.56% decline. Nifty also dropped from 25,423.60 to 25,056.90 points, a 1.44% decrease.

Major Reasons Behind the Market Decline

1. Visa Fee Hike: Trump’s H1B visa fee increase has directly affected Indian IT companies and their employees in the U.S., adding operational costs.
2. U.S. Tariffs: India faces 50% tariffs, which complicate trade negotiations. Both countries will need to adjust their positions.
3. Decline in IT Stocks: Profit-booking and visa hike concerns are lowering shares of major IT firms like TCS, Infosys, Wipro, Tech Mahindra, and HCL Tech.
4. Profit Booking After GST Rally: After GST reforms, investors started profit-taking due to global trade and geopolitical tensions.
5. Rupee Hits Record Lows: The rupee recently touched 88.75 against the dollar, potentially falling further, which affects market sentiment.
6. Strong Dollar: The dollar index has gained 0.5% in the last five days and 0.7% in three months, trading near 98.
7. Rising Crude Prices: Crude prices surged due to Middle East tensions, with Brent nearing $70 per barrel after being below $66 weeks ago.
8. Foreign Fund Outflows: Foreign investors withdrew ₹11,582 crore from the stock market in September, totaling ₹1,42,217 crore for this year.

Investor Losses in Four Days
Between September 18 and 24, BSE’s market cap fell from ₹4,65,73,486.22 crore to ₹4,60,56,946.88 crore, causing a loss of ₹5,16,539.34 crore for investors. Previously, GST reforms had provided a gain of ₹12 lakh crore.