Five reasons why Indian equities are bleeding as four-month winning streak heads for a sudden stop
Indian stocks took a sharp dive on Thursday morning, snapping a strong multi-month rally in brutal fashion. The Sensex plunged nearly 800 points in early trade, while the Nifty 50 fell under the 24,650 mark — with the midcap and smallcap segments taking an even harder hit.
At the heart of the slide: U.S. President Donald Trump’s surprise decision to slap 25% tariffs on most Indian imports, sending shockwaves through both equity and currency markets.
Markets Reel From Tariff Jolt
It didn’t take long for the mood to flip.
The Bombay Stock Exchange’s benchmark Sensex dropped 796 points — just over 1% — to hit an intraday low of 80,695. The Nifty 50 wasn’t far behind, shedding 244 points to touch 24,635.
While both indices clawed back some losses by mid-morning, the damage had been done. Traders described the mood as “nervous” and “confused.”
Mid and small-cap stocks were hit harder:
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BSE Midcap index down nearly 2%
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Smallcap index slid by close to 2.3%
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Banking, auto, and pharma stocks bore the brunt
A fund manager at a Mumbai-based asset firm summed it up this way: “You don’t just shrug off a 25% tariff on a major export destination overnight.”
Five Factors Dragging Indian Stocks Down
The selloff wasn’t caused by one headline — it’s a combination of five key pressure points building at once.
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Trump’s 25% Tariff on Indian Imports
This was the immediate trigger. The White House move is expected to impact more than $6 billion in annual Indian exports, especially in pharmaceuticals, textiles, and engineering goods. -
Weak Global Cues
Wall Street closed in the red overnight. Asian peers like the Nikkei and Hang Seng were also lower this morning. The global investor mood has shifted to risk-off mode, which usually spells trouble for emerging markets like India. -
FII Pullout
Foreign Institutional Investors (FIIs) turned net sellers for the third straight session. So far in the last five trading days, they’ve dumped over ₹7,800 crore worth of Indian equities. -
Valuation Fatigue
After a four-month rally that saw benchmarks hitting lifetime highs, some say the market was due for a breather. Valuations were stretched — especially in small and mid-cap stocks. -
Rupee Woes and Inflation Uncertainty
The Indian rupee fell 29 paise to 83.64 against the dollar this morning. Higher import costs due to tariffs could fuel inflation fears again, forcing the RBI into a tighter monetary stance.
Key Sectors Hit the Hardest
The pain wasn’t evenly spread. Export-heavy sectors were the first to bleed.
IT and pharma stocks were red across the board. Textile majors like Arvind Ltd and Welspun dropped sharply. Automobile exporters including Bajaj Auto and Motherson also posted losses.
Banking stocks were mixed. Public-sector banks showed some resilience, but private names like HDFC Bank and ICICI Bank dipped nearly 1%.
Here’s how major sectoral indices performed at 10:30 AM:
| Sector | % Change |
|---|---|
| IT | -1.8% |
| Pharma | -2.2% |
| Auto | -1.5% |
| FMCG | -0.6% |
| Banks (Nifty Bank) | -0.7% |
One trader joked, “If you’re exporting anything with a ‘Made in India’ label, you got punched today.”
Are More Losses Ahead?
The market’s trajectory for the coming weeks may depend on how New Delhi responds to Trump’s tariffs.
There’s been no official retaliation or counter-tariff yet. Investors will be watching for a statement from India’s Commerce Ministry or Finance Minister Nirmala Sitharaman. Any sign of a trade war could deepen the rout.
Also on the radar: the upcoming RBI policy decision and whether policymakers acknowledge the inflation risks from new import costs.
“This isn’t just about tariffs,” said Meera Vyas, an economist at a brokerage firm in Mumbai. “It’s about confidence. The global economy is wobbly, and India can’t afford to look indecisive.”
Will The Rally Come Back?
Despite Thursday’s chaos, there’s no full-blown panic — not yet. But that four-month winning streak that had traders cheering in June? It’s on thin ice.
The Sensex is still up 13% year-to-date, and the Nifty 50 has gained 11% in the same period. But profit-booking has been simmering for weeks.
A senior equity strategist noted, “This feels less like a crash and more like a reset. The market had gone too far, too fast. Now it’s catching its breath — violently.”
