Markets Bleed for Third Straight Week as Tariff Tensions Spike and FIIs Flee

Wall Street's fear gauge creeps higher as protectionist policies and foreign capital exodus hammer risk assets.

Tariff tremors rattle portfolios

Investors dump equities amid escalating trade war rhetoric - because nothing says 'global economy' like mutually assured destruction.

FIIs hit the eject button

Foreign institutional investors yank $2.8B from emerging markets in August alone, proving once again that hot money has commitment issues.

Meanwhile in crypto...

Bitcoin holds above $60K as traders rotate into decentralized alternatives to geopolitical clusterfucks. Some things never change.

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The market sell-off was broad-based, with 2,718 stocks declining against just 1,297 advances on the BSE. However, 140 stocks hit their 52-week highs while 80 touched their 52-week lows. Eleven stocks were locked in the upper circuit while seven hit the lower circuit.

Sectoral performance was largely negative except for FMCG stocks, which emerged as defensive plays. Pharma and healthcare sectors dragged the most, with Nifty Pharma declining 3.3 per cent. IT and metal sectors also faced significant pressure, retreating over 1.5 per cent each. Nifty Realty and Nifty Auto corrected 1.8 per cent and 1.04 per cent respectively, while Nifty FMCG bucked the trend, advancing 0.69 per cent.

Among individual stocks, Trent led the gainers with a 3.21 per cent surge to ₹5,179, followed by Eicher Motors which gained 2.21 per cent to ₹5,518. Asian Paints advanced 1.58 per cent to ₹2,434, while Hindustan Unilever ROSE 1.30 per cent to ₹2,554 and Nestle India climbed 1.20 per cent to ₹2,274.70.

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On the losing side, SUN Pharma was the worst performer, plummeting 4.54 per cent to ₹1,629.30. Dr Reddy’s Laboratories fell 3.85 per cent to ₹1,221.40, while Adani Enterprises declined 3.67 per cent to ₹2,341.50. Cipla dropped 3.19 per cent to ₹1,505 and Tata Steel lost 3.13 per cent to ₹153.

“The Indian equity market extended its decline for a second day, pressured by renewed tariff threats and punitive duties that could undermine India’s global trade competitiveness,” said Vinod Nair, Head of Research at Geojit Investments Limited. “Investor sentiment weakened further as FIIs now hold the second-highest net short position in derivatives, reflecting elevated caution.”

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The broader markets witnessed even sharper declines, with Nifty Next 50 falling 1.35 per cent to 66,192.80 and Nifty Midcap 100 dropping 1.33 per cent to 56,637.15. Banking stocks also remained under pressure, with Nifty Bank declining 0.62 per cent to 55,617.60 and Nifty Financial Services falling 0.59 per cent to 26,492.50.

Technical analysts highlighted the deteriorating market structure. “Nifty is now trading below its 20-day, 50-day and even 100-day EMA — a sign of mounting weakness,” Shah noted. “The daily RSI has dipped below the 40 mark and continues to trend lower, reinforcing the underlying bearish momentum.”

The rupee showed resilience amid the equity market turmoil, trading positive by 10 paise at 87.53 against the dollar. “Rupee traded positive by 10 paise at 87.53, though overall sentiment remained under pressure as the dollar index approached the 100 mark and the US imposed a 25 per cent tariff on India,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities. “The rupee is expected to remain volatile within a range of 87.25 to 88.00.”

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In commodities, gold prices declined on MCX, falling ₹350 to ₹97,700. “Gold traded weak by ₹350 at ₹97,700 in MCX, tracking softness in Comex gold which hovered NEAR $3290,” Trivedi explained. “The decline comes amid pressure from the US Fed’s continued hawkish stance and no indication of near-term rate cuts, which has dampened sentiment for safe-haven assets.”

Market participants remained cautious ahead of key US economic data releases, including Non-Farm Payrolls and Unemployment Rate figures, which could significantly influence global market direction.

“Markets continue to grapple with a mixed earnings season, while the recent tariff announcement and persistent foreign fund outflows are further weighing on sentiment,” said Ajit Mishra, SVP Research at Religare Broking Ltd. “Nifty is now approaching its next crucial support at 24,450; a breach of this level could trigger a retest of the long-term moving average, the 200-day EMA, near 24,180.”

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“Sentiment remains weak, with the potential for the correction to extend towards 24,400–24,450,” added Rupak De, Senior Technical Analyst at LKP Securities. “A further decline is likely if it slips below 24,400; otherwise, a recovery can be expected.”

Looking ahead, market volatility is expected to remain elevated in the coming week, driven by key macroeconomic triggers, including the progress of US-India tariff decisions and the upcoming RBI rate decision. Analysts suggest maintaining a cautious stance with a hedged approach until clear signs of market reversal emerge.

Published on August 1, 2025