Trade tensions and heavy foreign outflows dampen sentiment.
Indian equity markets extended losses by afternoon on Friday with the Nifty index slipping below the 24,500 level. Sensex tumbled over 300 points to 80,090. Broader markets too mirrored the weakness, with the Nifty Midcap index falling 0.8% and the Smallcap index declining 0.5%.
Barring energy and media, the rest of the indices traded in the red, with metals, pharma and real estate taking a knock.
The benchmarks are on track to end lower for the sixth consecutive week. Meanwhile, MSCI’s latest index rebalancing has reduced India’s weight by roughly 2% – 2.5%, potentially leading to outflows of around $20–25 billion.
Tariff uncertainty, subdued earnings season and heavy foreign capital outflow have weighed on investor sentiment since July. The Nifty index has dropped over 4% in the last one month.
Why Is The Market Falling?
Tariff Tantrums: After raising tariffs by another 25% a day ago, U.S. President Donald Trump stated that no trade talks with India would occur until pending issues are resolved.This comes over and above the already implemented 25% tariffs – taking the overall duty to 50%, effective August 27.
As trade tensions escalate, analysts expect the markets to remain volatile in the near-term.
Subdued Earnings: June quarter earnings season so far has failed to enthuse the street. Brokerages remain divided in their outlook. While Jefferies termed it as better than expected, Kotak Securities flagged weakness in consumption, IT services and banks.
Sustained FII Outflows: Foreign Institutional Investors (FIIs) sold around ₹5,000 crore worth of equities in the cash market on Thursday.
Year-to-date, FIIs have been net sellers of equities, totaling ₹1.78 lakh crore, while Domestic Institutional Investors (DIIs) have been net buyers, investing ₹4.37 lakh crore.
Markets: What Next?
SEBI-registered analyst Ashish Kyal noted that the Nifty index has retraced most of Thursday’s gain and has not given any reversal candle since morning. He advised traders to remain cautious. If the index slips below 24,400, it could test the 24,340 – 24,320 zone. On the upside, he identified the next hurdle at 24,540 for now. Kyal cautioned that it was a scalping market, and it is better to avoid positional trades currently.
Stock Calls
Analyst Vinay Taparia flagged a breakout in CDSL. The stock can move to ₹1,700 in the short term, but a close below ₹1,540 negates this view.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<