Nifty Plunges Below 25,000 Mark as Global Weakness and AI Rally Fears Crush Sentiment

Global markets stumble while AI euphoria hits a wall—Nifty can't catch a break below the critical 25,000 threshold.

What’s driving the drop?

Overseas turmoil and overheated tech valuations are dragging everything down. No real surprises there—just another day where traditional finance shows it’s allergic to momentum.

Where does that leave traders?

Stuck watching red screens and wondering if the 'smart money' is just smart at losing it. Maybe it’s time to admit—AI can predict patterns, but it can’t fix sentiment.

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Adding to global concerns, Japan’s exports fell 2.6 per cent year-on-year in July, marking the sharpest drop in four years and dragging the Nikkei over 1 per cent lower. “Uncertainty around US-India trade negotiations also keeps exporters on edge,” analysts said, as markets await clarity on potential tariff policies.

Foreign institutional investors continued their selling streak, offloading equities worth ₹634 crore on Tuesday, though at a slower pace than previous sessions. However, domestic institutional investors provided strong support, purchasing equities worth ₹2,261 crore. “FIIs remained sellers, though at a slower pace, while DIIs continued strong buying, lending support to the market,” market participants observed.

The government’s proposed GST 2.0 reforms continue to generate positive sentiment for consumption-related sectors. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that “the market has been responding to the potential demand boost to sectors like automobiles, FMCG, insurance and select financials which are expected to benefit from the GST rationalisation.”

However, trade policy concerns remain a key overhang. “The August 27th deadline for the 25 per cent secondary tariff on India is fast approaching, and the news coming from the TRUMP administration is not positive,” Vijayakumar warned, suggesting that “President Trump’s tariff policy may continue, which will have negative implications for India in the short-term.”

Among individual stocks, technology leader Infosys emerged as the top gainer, rising 1.71 per cent to ₹1,464.60, followed by Bharti Airtel which gained 1.67 per cent to ₹1,941.60. Eicher Motors advanced 1.35 per cent to ₹325.80, while NTPC climbed 1.22 per cent to ₹339.15 and Nestle India added 1.13 per cent to ₹1,174.50.

On the downside, Shriram Finance led the losers, declining 1.36 per cent to ₹617.85, followed by Bajaj Finance which fell 1.07 per cent to ₹892.65. Hindalco dropped 1.07 per cent to ₹699.15, while Bharat Electronics Limited declined 1.01 per cent to ₹376.20 and Tata Motors slipped 0.96 per cent to ₹693.55.

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The automobile sector showed particular strength, with the Nifty Auto index surging to a 10-month high on expectations of tax cuts. “Tax cut buzz drove Maruti, Ashok Leyland, Eicher Motors and TVS Motors to fresh highs,” said Prashanth Tapse, Senior VP Research at Mehta Equities.

Technical analysts remain cautiously optimistic about the near-term outlook. “If Nifty sustains above 25,050, it could head towards 25,250 and 25,500 levels in the coming sessions,” said Mandar Bhojane, Senior Technical Analyst at Choice Equity Broking. “Momentum remains bullish, and dips are likely to be seen as buying opportunities.”

Banking stocks continued to underperform, with Bank Nifty trading below its recent breakout zone. “The index is still trading below its recent breakout zone, with immediate resistance placed at 56,000,” analysts noted.

Commodity markets also reflected global caution, with Gold prices declining to their lowest level in nearly three weeks. “Bullion slipped on Tuesday, weighed by a stronger dollar and waning safe-haven demand,” said Rahul Kalantri, VP Commodities at Mehta Equities. Oil prices remained under pressure as geopolitical tensions eased following diplomatic progress on the Ukraine conflict.

Market participants are now closely watching for cues from the Federal Reserve’s Jackson Hole symposium, with Powell’s speech expected to provide guidance on the monetary policy trajectory. “Markets are also turning their focus to the upcoming comments from the Fed Chair, which are expected to guide outlook on monetary policy, inflation, and growth,” analysts said.

With September rate cut odds still above 90 per cent despite recent inflation concerns, investors remain hopeful for monetary easing. However, the combination of global uncertainty and domestic policy concerns suggests markets may remain volatile in the NEAR term as investors navigate multiple crosscurrents.

Published on August 20, 2025

• Infosys Ltd
• Bharti Airtel Ltd
• Eicher Motors Ltd
• NTPC Ltd
• Nestle India Ltd