Today's Stock Market: A Drop of 800 Points for Sensex to Reach 80,695; Nifty Falls Below 24,650
The Indian stock market has been experiencing turbulence in recent days, with the Sensex plunging nearly 800 points and the Nifty slipping below 24,650. This volatility can be attributed to a combination of global cues and domestic factors.
US Tariffs and their Impact
The US imposed a 25% tariff on Indian exports starting August 1, 2025, affecting $81 billion in trade and targeting sectors like pharmaceuticals, textiles, gems & jewellery, electronics manufacturing, and automotive components. The tariffs are expected to reduce Indian GDP growth by 0.3–0.4%, and part of the tariff burden will fall on exporters due to competitive pressures.
Export-heavy sectors, particularly textiles and gems & jewellery, face significant risk due to higher tariffs compared to competitors, leading to reduced margins, demand destruction, and share price drops. For instance, Welspun Living and Kitex Garments have seen declines of 5% and 4%, respectively.
However, despite initial market drops, indices recovered quickly as Foreign Institutional Investors had already factored in tariff impacts, withdrawing substantial funds before the tariff enforcement. Investors are rotating capital from export-dependent sectors facing downgrades toward more domestically oriented sectors like financial services, infrastructure, and FMCG.
Crude Oil Prices and their Effect
India's refineries, including Reliance Industries and government-owned ones, have benefitted from discounted Russian crude oil imports, supporting refining margins. However, US tariffs and restrictions linked to India's trade and defense ties with Russia, alongside reduced availability of cheap Russian crude, increase crude import costs, squeezing refiner profitability and creating uncertainty in energy and petroleum sectors.
Market Resilience and Future Outlook
The Indian stock market has demonstrated resilience, recovering losses quickly despite tariff shocks and crude oil import concerns. The market is expected to remain volatile; sectors heavily exposed to exports and energy-import costs may see earnings downgrades, while domestic-focused sectors and fixed-income instruments may attract investor interest amid geopolitical and macroeconomic uncertainty.
All major sectors are open in the red today, with export-driven sectors such as IT, pharmaceuticals, and textiles seeing sharp declines due to fears of new tariffs impacting overseas earnings. Domestic institutional investors have been buying selectively, but their efforts are insufficient to offset the heavy selling from overseas. The overall market capitalization of BSE-listed companies has fallen by nearly Rs. 5 lakh crore.
Bharti Airtel is one of the few stocks that have risen marginally to Rs. 1,931 but remains below its recent peak. Banking and telecom stocks are also trading lower, with IT companies facing selling pressure as investors reduce exposure to export-reliant businesses.
In conclusion, the US tariffs have imposed direct pressure on export-oriented Indian sectors, leading to margin squeezes and potential GDP impact, while higher crude oil prices and reduced access to discounted Russian crude pose risks to refinery profitability. The stock market is volatile but has, so far, avoided a severe crash due to pre-factored risks and capital rotation toward domestic plays.
References:
- Economic Times
- The Hindu
- Financial Express
- Livemint
- Amidst the ongoing volatility in the Indian stock market due to global and domestic factors, investors might consider diversifying their portfolios to include sectors less affected by export tariffs, such as financial services and FMCG, which appear more resilient to the current market conditions.
- For long-term investors, it could be strategic to monitor the stock-market closely, particularly focusing on the impact of US tariffs and crude oil prices on various sectors, and consider investing in stocks with strong domestic focus that demonstrate resilience in the current market environment, such as banking and telecom.
