Sensex & Nifty Plunge for 6th Week as US Tariff Dispute Intensifies

A confluence of negative factors, led by a severe escalation in trade tensions with the United States, rattled Dalal Street on Friday, August 8, 2025, causing Indian benchmark indices to close deep in the red.

The market concluded a painful week with a significant downturn, marking the sixth straight week of losses for both the Sensex and the Nifty 50—the longest losing streak since the COVID-19 pandemic crash in March 2020. The BSE Sensex plummeted 765.47 points (0.95%) to close at 79,857.79, while the NSE Nifty 50 shed 232.85 points (0.95%) to settle at 24,363.30. The overwhelmingly bearish sentiment led to significant wealth erosion for investors as broader markets also faced intense selling pressure.

US Tariffs: The Primary Catalyst for the Sell-Off

The primary catalyst for Friday’s sharp sell-off was the escalation of trade tensions with the United States. Reports confirmed that the US administration has not only ruled out further trade negotiations but has also doubled tariffs on certain Indian exports to 50%. Washington has justified the move as a response to India’s continued procurement of Russian crude oil.

This development has sent shockwaves through sectors heavily reliant on US exports, such as textiles, gems and jewellery, and auto ancillaries. The suspension of trade talks has created a cloud of uncertainty that the market is struggling to price in. Analysts fear these steep tariffs could render Indian exports uncompetitive and potentially reduce India’s GDP growth by up to 1%.

Relentless Foreign Investor Outflows Add to Pressure

Adding to the market’s woes is the continuous selling by Foreign Institutional Investors (FIIs). FIIs have been net sellers on every trading day in August, pulling out a substantial ₹15,950 crore from the cash market this month alone. On Thursday, their net sales figure was nearly ₹5,000 crore. This relentless outflow indicates growing concern among foreign investors regarding India’s high valuations amid current macroeconomic headwinds.

Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The weak market indicators, along with the relatively high valuations in India, are triggering sustained selling by the FIIs.” The only silver lining, according to experts, is the robust and consistent buying from Domestic Institutional Investors (DIIs), fueled by steady inflows into mutual funds, which has prevented an even steeper market decline.

Widespread Declines Across Sectors

The selling pressure was broad-based, extending beyond the headline indices. The Nifty Midcap 100 index fell by 1.64%, and the Nifty Smallcap 100 index closed 1.49% lower. All sectoral indices on the NSE ended the day in negative territory. Nifty Realty was the hardest-hit sector, tumbling 2.11%, followed by Nifty Metal (-1.76%), Auto (-1.40%), and Pharma (-1.30%).

Several heavyweight stocks contributed to the decline. Top losers on the NSE included IndusInd Bank, Bharti Airtel (which also saw a large block deal), and Adani Enterprises.

Key Factors for Investors to Monitor

For retail investors, the current market environment is a test of patience. The combination of negative factors suggests that volatility will likely persist. Here are a few key developments to watch:

• US-India Trade Developments: Any statement from Washington or New Delhi regarding the tariff situation will be the most crucial short-term market driver.
• FII/DII Activity: Continue to monitor institutional fund flows. A slowdown in FII selling or sustained DII support could bring some stability.
• Nifty’s Key Support Levels: Technically, the Nifty has breached several support levels. The next crucial support zone is 24,200-24,300. A decisive break below this could trigger further declines.
• Global Economic Data: Keep an eye on global inflation data and central bank commentary, as these will continue to influence worldwide investor sentiment.

While the current correction is challenging, it may present opportunities for long-term investors to accumulate fundamentally strong stocks at lower valuations. However, caution is advised, and it may be prudent to wait for market stability before making aggressive investment decisions.

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Disclaimer: This article is for informational purposes only and should not be considered investment advice. Please conduct your own research before making any investment decisions.