Sensex, Nifty Tumble as US Tariffs Spook Investors
With the announcement now making the tariffs a reality, investor sentiment weakened in early trade
Mumbai: Indian equities slipped sharply on Tuesday as the United States prepared to impose steep tariffs on Indian goods effective Wednesday, prompting investors to book profits. The BSE Sensex plummeted 849.37 points or 1.04 per cent to close at 80,786.54, while the NSE Nifty50 declined 255.70 points or 1.02 per cent to end at 24,712.05. The benchmark indices had last seen a similar sharp drop on May 20.
Hariprasad K, research analyst and founder, Livelong Wealth, said, “The immediate trigger came from the US, where a draft notice proposing tariffs of up to 50 per cent on Indian goods starting Wednesday shook investor confidence. This trade overhang was compounded by foreign institutional outflows, weakness in the rupee, and profit booking ahead of the monthly expiry. Domestic sentiment was further pressured by weak global cues, with risk-off positioning dominating the day.”
During the day, the Sensex tumbled 949.93 points, or 1.16 per cent, to hit a low of 80,685.98 while the Nifty fell 278.15 points, or 1.11 per cent intraday, to hit a low of 24,689.60.
The selloff was broad-based, with 2,891 stocks declining compared to just 1,220 advancing on the BSE. The broader markets underperformed significantly, with the BSE MidCap index falling 1.3 per cent and the SmallCap index declining 1.7 per cent. The Nifty Midcap 100 dropped 935.30 points or 1.62 per cent to 56,766.20. The equity market will remain shut on August 27 on account of Ganesh Chaturthi.
Among sectors, capital market, defense, and real estate shed over two percent, whereas despite weak market sentiment, the FMCG index outperformed and rallied nearly one percent. Market volatility surged, with the India VIX jumping 3.7 per cent to 12.19, indicating heightened uncertainty among investors.
Meanwhile, the rupee depreciated 12 paise to close at 87.68 against the U.S. dollar tracking weak domestic markets, however softening of crude oil prices cushioned the rupee's slide.
The steep 50 per cent tariff on Indian goods entering the United States will take effect from August 27, severely impacting several labour-intensive export sectors, such as shrimp, apparel, leather and gems and jewellery. The high additional import duties would affect more than half of the $ 86 billion Indian exports to America, while the remaining items, including pharmaceuticals, electronics, and petroleum products, will continue to be exempt from the levy.
