Nifty, Sensex Saw Sharp Decline Today, As Indo-US Trade Deal Remains Elusive

Mumbai, August 1: Indian equity benchmarks experienced their second consecutive day of losses on Friday, as global trade tensions and widespread investor pessimism impacted markets. Significant declines were observed across the metal, IT, and telecom sectors. Indo-US trade deal remains elusive.

Nifty 50 closed the day today, down by 203 points or  0.82%. Sensex closed the day, down by 585.67 points or 0.72%.

US Tariff Decision Sparks Global Selloff

The pronounced sell-off in markets followed a sweeping executive order from US President Donald Trump, who announced new 25% tariffs on Indian exports as part of a renewed protectionist agenda. The order, titled ‘Further Modifying The Reciprocal Tariff Rates’, imposes revised tariff rates on nearly 70 countries.

Although President Trump had previously hinted at a “penalty” on India for its purchases of Russian military equipment and energy imports, the final document did not explicitly detail such a measure. While 1st August marked the tariff announcement deadline, these new duties are officially set to come into force from 7th August.

This development has intensified fears of widespread disruption to global trade flows, significantly dampening investor sentiment across international markets. Analysts suggest that this blanket tariff, which, unlike those for other countries, offers no product-level exemptions for India, is one of the toughest trade actions taken by the US against a key trading partner in recent years, potentially affecting sectors like pharmaceuticals, electronics, and petroleum products.

FIIs Accelerate Selling; ₹5,589 Crore Pulled Out

Foreign Institutional Investors (FIIs) remained consistent net sellers, offloading a substantial ₹5,588.91 crore worth of Indian equities on Thursday. This accelerated outflow of capital deepens concerns about the impact of foreign capital withdrawals on the domestic market, contributing significantly to the negative market sentiment. This selling trend by FIIs has been observed for several consecutive sessions, with cumulative outflows exceeding ₹25,000 crore in recent trading days, partly influenced by a strengthening US dollar and a challenging Q1 earnings season in some FII-heavy sectors.

Sectoral Drag: Pharma, Metal, Auto, IT, Telecom

Among the Sensex constituents, Sun Pharma emerged as the top laggard, sliding 4.43% after reporting a 20% year-on-year drop in its Q1 consolidated net profit to ₹2,279 crore. Other prominent stocks that experienced significant declines included Tata Steel, Maruti Suzuki, Tata Motors, Infosys, Bharti Airtel, and Tech Mahindra. These sectoral losses highlight the broad-based negative impact on export-oriented and cyclically sensitive industries.

Conversely, a few stocks managed to defy the broader market downturn and posted gains, thereby helping to cushion some of the overall losses. These included Trent, Asian Paints, Hindustan Unilever, ITC, Kotak Mahindra Bank, and Reliance Industries. The FMCG sector, in particular, showed resilience, often viewed as a defensive play during market downturns due to its focus on domestic consumption.

Global Markets in the Red

The negative sentiment was not confined to India, as global markets also closed sharply lower. Across Asia, major indices such as the Nikkei 225 in Japan, the Kospi in South Korea, the Shanghai Composite in China, and the Hang Seng in Hong Kong all ended the day in negative territory. European markets also traded in the red, following a weak closing performance on Wall Street overnight, indicating a widespread risk-off attitude among global investors. Meanwhile, Brent crude prices fell by 0.39% to $71.42 per barrel, further reflecting the pervasive cautious sentiment across commodities.

Looking Ahead For Monday

• Continued Caution from Investors
  Markets may open weak on Monday as global risk-off sentiment remains elevated following the US tariff shock. Investors are likely to remain cautious and closely monitor global cues.
• Focus on Tariff Implementation Timeline
  Since the new US tariffs come into effect on 7th August, traders may keep a close watch on India-US diplomatic reactions and any relief measures or sectoral exemptions that could alter market direction.
• FIIs’ Behaviour Under Scrutiny
  Persistent selling by FIIs will be a major factor to watch. If outflows continue, especially in large-cap stocks, indices may face additional pressure.
• Earnings and Macro Data Impact
  Any major Q1 corporate results and upcoming domestic economic indicators (such as PMI data) could influence investor sentiment amid global uncertainty.
• Sectors to Watch
  Export-oriented sectors like pharma, IT, and metals may continue to face headwinds due to trade concerns, while FMCG and consumption-driven stocks could see defensive buying.
• Technical Support Levels
  Nifty has slipped below the psychological 24,600 mark. If selling continues, the next key support could be around 24,400, while 24,800 may act as resistance if there’s a recovery attempt.

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