Market Mayhem: Sensex Swings Over 1100 Points on US Tariff Shock

The Indian stock market was thrown into turmoil on Thursday, July 31, 2025, proving once again how quickly global politics can impact your portfolio. A surprise announcement from the United States about imposing a steep 25% tariff on all Indian goods sent the markets into a nosedive at the opening bell, only for a stunning recovery to unfold in the later hours.

It was a classic case of panic and resilience, and a reminder for every investor to remain calm amidst volatility.

The Morning Plunge: A ₹5.5 Lakh Crore Shock

The day began on a disastrous note. Following the overnight announcement from the US, the markets opened with a massive gap down. The 30-share BSE Sensex plunged over 800 points in early trade, while the NSE Nifty 50 tumbled below the crucial 24,650 mark.

Within the first 15 minutes of trading, the market capitalisation of BSE-listed companies eroded by a staggering ₹5.5 lakh crore. The reason was clear: the US was threatening a 25% tariff on all Indian imports starting August 1, along with an unspecified “penalty” related to India’s energy and defence deals with Russia. This news sent a shockwave through sectors that depend heavily on exports to the US.

Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, summed up the initial sentiment: “The 25% tariff on India… is very bad news for Indian exports and thereby on the growth prospects of the Indian economy in the short run.”

The Afternoon Rebound: What Drove the Recovery?

Just when it seemed the bears were in complete control, the market staged a remarkable comeback. From its intraday low, the Sensex recovered more than 1,100 points, and the Nifty clawed its way back above 24,850 before settling.

So, what caused this dramatic reversal?

1. A Calculated Negotiation Tactic? Many market experts began to view the harsh tariff as a pressure tactic from the US to gain leverage in ongoing trade negotiations. The expectation grew that the final tariff rate, after discussions, could be much lower.
2. Domestic Buying Support: While Foreign Institutional Investors (FIIs) continued their selling streak, domestic buyers, including retail and institutional investors, likely stepped in at lower levels, seeing value in the dip.
3. Strength in Domestic-Focused Stocks: Companies with a primary focus on the Indian domestic market were largely insulated from the panic. Strong quarterly results from giants like Hindustan Unilever (HUL) provided a much-needed boost of confidence.

By the end of the day, the markets had erased most of their terrifying losses. The BSE Sensex closed at 81,185.58, down just 296.28 points (0.36%), while the Nifty 50 ended at 24,768.35, down 86.70 points (0.35%). While still in the red, this was a huge recovery from the morning’s lows.

Sectoral Winners and Losers

The impact of the tariff news was not uniform across the board.

The Losers:

• IT Sector: Companies like Infosys, TCS, and Wipro, which derive a significant portion of their revenue from the US, saw their stocks fall.
• Textiles: This export-heavy sector was hit hard, with stocks like Welspun Living and Vardhman Textiles declining sharply.
• Pharma & Auto: These sectors also have significant exposure to the American market and faced selling pressure.
• Metals: Stocks like Tata Steel and Adani Enterprises were among the top losers on the Nifty 50.

The Resilient Ones:

• FMCG: Led by a 3.55% surge in HUL’s stock post-results, this sector was the star performer.
• Financials: Key stocks like Jio Financial Services and Kotak Mahindra Bank also ended the day with gains, helping lead the recovery.

What to Watch Next

This story is far from over. For retail investors, the key is to monitor developments without making hasty decisions. Here are a few things to keep an eye on:

• Official Negotiations: Watch for official statements from both the Indian and US governments. A scheduled visit by a US trade delegation will be a critical event.
• The Rupee’s Movement: Keep an eye on the USD/INR exchange rate. A weaker rupee can partially offset the negative impact of tariffs for exporters.
• Nifty’s Technical Levels: For traders, the immediate support for the Nifty 50 is seen around the 24,600-24,650 zone, with resistance near the 25,000 mark.
• Institutional Flows: Continue to track the activity of Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs). Sustained domestic buying could continue to provide a cushion against foreign outflows.

Today’s session was a rollercoaster, but it offered a valuable lesson: the market often overreacts to news in the short term. For long-term investors, such volatility can present buying opportunities in fundamentally strong companies, especially those focused on India’s robust domestic consumption story.

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