Monday saw a steep decline in the Indian stock market as the benchmark indices were heavily pressured to sell due to persistent foreign fund outflows, unclear US trade policies, and weak global cues.

The announcement by US President Donald Trump of a 25% tariff on all Colombian goods entering the country was one of the primary causes of the decline.

This move, made in response to Colombia's decision to block US military deportation flights, has raised fears of a potential escalation in global tariff wars.

Adding to the cautious sentiment is the upcoming Federal Open Market Committee (FOMC) meeting scheduled for January 28-29.

While analysts predict that the Federal Reserve will likely maintain interest rates in this meeting, speculation about possible rate cuts in March is growing amid concerns over Trump's economic policies, including extended tax cuts and tariffs.

Foreign fund outflows and muted third-quarter earnings from Indian companies have further dented investor confidence.

Additionally, concerns over Chinese DeepSeek's cost-efficient AI model disrupting the business of tech giants like Nvidia and Google added to the uncertainty.

Global markets provided little support, with US stock futures trading lower during Asian trading hours. The S&P 500 futures dropped by 1 per cent, and Nasdaq 100 futures fell by 1.9per cent.

Asian markets reflected a mixed sentiment. While Hong Kong's Hang Seng Tech Index rose by 2 per cent, Japan's Nikkei 225 futures declined by 0.6 per cent.

Shares of Nvidia supplier Advantest Corporation dropped 8.6 per cent in Tokyo, and SoftBank Group shares fell by 5.4 per cent.

The BSE Sensex plunged 842.4 points, or 1.1 per cent, to hit an intraday low of 75,348.06, while the NSE Nifty slipped 265.35 points, or 1.14 per cent, to breach the 22,850 level and touch 22,826.85.

Although the indices recovered slightly later in the session, they remained in the red, with the Sensex trading down by 772 points and the Nifty down by 249 points around 2:30 p.m.