Market Meltdown: Sensex & Nifty Tumble as US Tariff Fears Spook Investors

A storm of global trade tensions hit Dalal Street hard today as investors reacted to the news of impending US tariffs on Indian goods. This development erased early gains and pushed the benchmark indices into a significant downturn, marking a weak start to the August series.

The Indian stock market ended its second consecutive session in the red on Friday, August 1, 2025. The BSE Sensex plummeted 585.67 points, or 0.72%, to close at 80,599.91. Similarly, the NSE Nifty 50 index fell by 203 points, or 0.82%, to settle at 24,565.35. Market sentiment was overwhelmingly cautious, with volatility spiking as traders and investors tried to make sense of the new geopolitical landscape.

The Tariff Trigger

The main catalyst for this market turmoil was an executive order signed by US President Donald Trump. The order announced a new, higher tariff regime for nearly 70 countries, with India facing a steep 25% tariff on its exports to the United States. This move, set to be implemented on August 7, reignited fears of a full-blown trade war, impacting investor confidence not just in India but across Asia. Asian markets extended their losing streak following the announcement.

The news sent ripples through the currency and commodity markets as well. The Indian Rupee, however, showed some resilience, though it remained under pressure.

Broad-Based Selling and Sectoral Impact

The sell-off was broad-based, with most sectors feeling the heat. Foreign Portfolio Investors (FIIs) were net sellers, offloading shares worth ₹5,588.91 crore on Thursday, which further weakened market sentiment. Domestic Institutional Investors (DIIs) tried to cushion the fall by purchasing a net of ₹6,372.71 crore, but the selling pressure was too intense.

Stocks with significant exposure to international markets, particularly the US, were among the worst hit. The IT and Metal sectors saw heavy selling. Top losers on the Sensex included major names like Sun Pharma, Tata Steel, and Infosys.

Interestingly, the FMCG sector emerged as a defensive play. With their business being relatively immune to external trade disruptions, stocks like ITC and Hindustan Unilever (HUL) ended in the green. Analysts noted that investors flocked to these stocks, which are seen as a safe haven during times of high uncertainty.

As Vinod Nair, Head of Research at Geojit Financial Services, put it, “The Indian equity market extended its decline for a second day, pressured by renewed tariff threats and punitive duties that could undermine India’s global trade competitiveness.”

What to Watch Next

For retail investors, the coming days will be crucial. The market is expected to remain volatile as it digests the full impact of these tariffs. Here are a few key things to keep an eye on:

• Official Responses: Watch for statements from the Indian government and trade bodies on how they plan to respond to the US tariffs.
• Tariff Implementation (August 7): The market will be closely watching for the official implementation of the tariffs and any last-minute negotiations.
• RBI Rate Decision: The upcoming RBI monetary policy meeting will be even more critical now, as the central bank will have to factor in this new inflationary and growth challenge.
• Nifty’s Technical Levels: Analysts are pointing to the 24,450 level as the next crucial support for the Nifty. A breach of this could lead to a further correction.

The current situation is a stark reminder of how interconnected global markets are. While the underlying fundamentals of the Indian economy may be strong, geopolitical events can cause significant short-term pain. For now, caution is the word on the street.

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