Mumbai: Indian stock markets on Friday witnessed a sharp decline at the start of the day’s trading session. The nerves of investors were shaken by renewed trade hostilities between India and the United States. The downturn came on the heels of US President Donald Trump’s assertion that no trade negotiations will be held with India until all existing disputes are addressed.
Markets reacted swiftly to the escalating tensions, triggered by the US administration’s imposition of an additional 25% tariff on Indian exports. This has effectively doubled the current levy, stoking fears of a deeper trade rift and its possible economic repercussions.
The BSE Sensex opened on a weak note and was down 310.53 points at 80,312.73 by 9:35 am. The NSE Nifty50 followed suit, slipping 84.55 points to settle at 24,511.60 in early trade. The sell-off marks a shift from Thursday’s volatile session, where markets saw an unexpected intraday rally despite the tariff announcement.
Market analysts suggest that underlying concerns about trade relations and weak macroeconomic indicators are feeding into the broader bearish sentiment.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market’s technical indicators remain fragile. “The formation of continuous lower lows on Nifty points to a bearish trend. On the earnings front, there’s still no major uptick expected for FY26, and that’s weighing on fundamentals. Combine that with expensive valuations and it’s no surprise that FIIs are exiting in droves.”
Foreign Institutional Investors (FIIs) have continued to offload Indian equities throughout August, with total outflows touching nearly ₹15,950 crore so far. Their persistent selling streak has been somewhat counterbalanced by strong Domestic Institutional Investor (DII) inflows.
“Thursday’s recovery on the Nifty was largely due to short-covering, sparked by robust DII purchases totaling ₹10,864 crore,” Dr. Vijayakumar added. “However, in the current scenario marked by deteriorating US-India trade ties, we can expect FIIs to maintain their selling momentum. The silver lining remains DII support, which has kept the market from falling more sharply.”
Market volatility is likely to persist in the near term, with traders watching closely for any updates or escalations in trade developments. Investors are advised to tread cautiously and focus on quality stocks with strong fundamentals amid the uncertainty.
