Indian equity markets witnessed a sharp sell-off on Thursday, driven by renewed apprehensions about significantly higher tariffs on Indian exports to the United States. The benchmark indices extended their losing streak to a fourth consecutive session, eroding a massive amount of investor wealth.
Market Plunge Triggered by Tariff Threats
The selling pressure intensified after US President Donald Trump signed a bill that could potentially impose tariffs as high as 500% on goods from India if the country continues to purchase oil from Russia. This development amplified existing concerns over the comparative disadvantage Indian exporters already face due to US tariffs. Market participants highlighted that a further hike could severely impact India's export industry.
The trading session began on a weak note, with the Sensex down by about 200 points. The decline accelerated as the day progressed, with the index closing at 84,181 points, down 780 points or 0.9%. The Nifty also fell by 264 points. Over the last four sessions, the Sensex has lost a substantial 1,581 points or 1.8%.
Wealth Erosion and Foreign Fund Exodus
The market carnage wiped out approximately Rs 9 lakh crore from investor wealth, pulling India's total market capitalisation down to Rs 473 lakh crore, according to data from the Bombay Stock Exchange (BSE). A key driver of the downturn was aggressive selling by foreign institutional investors (FIIs).
Data showed that foreign funds were net sellers to the tune of Rs 3,367 crore during Thursday's session. In a contrasting move, domestic institutional investors (DIIs) provided some support as net buyers, purchasing shares worth Rs 3,701 crore.
Stock-Specific Moves and Cautious Outlook
Among the Sensex constituents, heavyweights like Reliance Industries, Larsen & Toubro (L&T), and Tata Consultancy Services (TCS) contributed the most to the index's fall. The decline was partially cushioned by gains in stocks such as ICICI Bank, Hindustan Unilever, Bajaj Finance, and Bharat Electronics.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the market extended its losses as sentiment turned cautious. The renewed US tariff concerns and persistent foreign fund outflows overshadowed optimism surrounding corporate earnings growth and a robust estimated GDP growth for FY26. He added that markets are likely to remain range-bound in the near term, influenced by Q3 earnings and developments related to US tariffs.
Siddhartha Khemka of Motilal Oswal Financial Services echoed the cautious sentiment, stating that ongoing geopolitical tensions and weak global market cues could continue to weigh on investor sentiment, keeping the leading indices subdued. The delay in the signing of a comprehensive US-India trade deal also contributed to the negative mood on Dalal Street.
