Markets fell sharply as US tariffs on Indian exports raised growth concerns.
FIIs sold heavily, but DIIs stepped in to stabilise the market.
Most sectors slipped, with pharma and realty hit hardest, traders eye 25,000 as resistance.
The Indian stock market began the session on August 26 on a rough footing and has since deepened its losses, with the Sensex tumbling around 700 points and the Nifty 50 breaking below 24,900. The culprit behind the sour sentiment on Dalal Street was Washington’s notification of an additional 25% tariff on Indian exports, effective 27 August. With this, total duties on Indian goods headed to the US will climb to 50%, among the steepest for any American trade partner.
“The biggest headwind for Indian markets remains whether Nifty can scale the ‘Wall of Worry’ around the 50% Trump tariff set to kick in on August 27, which threatens to make almost all of India’s $86.5bn exports to the US commercially unviable. With the US accounting for 18% of exports and 2.2% of GDP, even a 25% tariff could shave off 0.2–0.4% of GDP, risking growth slipping below 6%,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
Other than that, risk-aversion also spread ahead of the crucial PMO meeting over Trump’s tariffs, scheduled for later today.
Meanwhile, Indian equities still managed to showcase resilience, despite the exodus of foreign institutional investors. To offset the FII selloff, DIIs have stepped up, keeping the market off a deeper fall.
Despite the sharp sell-off by foreign institutional investors, domestic institutional investors stepped in to provide support, limiting the damage. “While foreign investors have remained steady sellers, strong domestic institutional inflows have more than offset the outflows. Liquidity has become the key driver of this resilience, and with flows expected to remain firm, a sharp correction looks unlikely,” said V K Vijayakumar of Geojit Investments.
Sectoral indices displayed a negative picture as trading began today. The broader market was no exception to the sell-off. The Nifty Midcap 100 slipped 0.97% and the Smallcap 100 fell 1.13%, while volatility spiked, with India VIX climbing over 4%.
Among sectors, FMCG was the lone bright spot, barely holding on to gains. The steepest fall came from pharma, down 1.5%, and realty, which lost just over 1%. Financial services, metals, private banks and PSU banks also traded with cuts, alongside a fall across consumer durables, auto, oil and gas, media and IT.
With Nifty failing to display directional strength, Shrikant Chouhan, Head Equity Research, Kotak Securities believes level-based trading would be an ideal strategy for day traders. “For the bulls, the levels of 25,000 will be the immediate breakout point. A successful breakout above 25,000 can push the market towards 25,150-25200,” Chouhan said.
On the other hand, he sees 24,900-24,850 acting as key support zone for the day's trading. Below 24,850, the chances of reaching 24,750-24,670 increase significantly.
