The S&P 500’s dramatic plunge over the last month —shedding $5 trillion in value since its February peak—sends a chill across the globe, signaling turbulence that could ripple through domestic bourses like the Sensex and Nifty.
The U.S. benchmark’s decline, now in correction territory after a 10 percent drop from its high, marks a stark reversal from January, when Wall Street cheered U.S. President Donald J. Trump’s agenda of tax cuts and deregulation. The last such correction hit in late 2023, but this one feels different—and closer to home.
The numbers are sobering: the SPY, a fund tracking the S&P 500, closed Thursday at $551.42, down sharply from its February 19 peak of $612.30. That’s a near-10 percent fall from its yearly high of $613.23, driven in part by the struggles of the “Magnificent Seven”—U.S. tech giants like Apple and Tesla that have powered global markets for two years but stumbled in 2025.
For India, where foreign institutional investors (FIIs) often take cues from Wall Street, this sell-off raises red flags. Last year, FIIs poured over ₹2 lakh crore into Indian equities, but a U.S. downturn could reverse that flow, pressuring the rupee and stocks.
As American investors flee to safe havens, the shift is palpable. The Japanese yen, a refuge thanks to Japan’s hefty foreign assets and low rates, has surged 6.5 percent this year, buoyed by a weakening dollar. Gold, a favorite in India too, hit a record high Thursday, up more than 13 percent in 2025—a boon for domestic holders but a sign of global jitters.
In Mumbai’s Dalal Street, where gold often mirrors economic unease, traders see parallels to their own playbook.
India’s markets aren’t immune. The Sensex, hovering near 74,000 recently, could face headwinds if U.S. volatility spooks foreign funds. Trump’s agenda once promised a rising tide for all, but its faltering momentum—coupled with tech’s fade—has analysts here rethinking exposure. For Indian savers and investors, the S&P 500’s woes are a reminder: what happens in New York doesn’t stay there—it echoes in Mumbai, too.