The sharp correction came at a time when investors were hoping for stability after months of volatility. Instead, global uncertainty, rising geopolitical risks and renewed trade tensions combined to deliver what market participants described as a “risk-off” phase across Dalal Street.
Trump tariffs weigh heavily on sentiment
The dominant trigger behind the sustained selloff was renewed tariff-related rhetoric from US President Donald Trump. Markets have remained under pressure since Trump signalled that tariffs on Indian goods could be raised over India’s continued purchases of Russian crude oil.
The situation worsened after the US also hinted at imposing punitive 500% tariffs on countries importing Russian oil, rekindling fears of a major disruption to global trade flows.
The India-US trade relationship has come sharply into focus as negotiations on a bilateral trade agreement remain unresolved despite six rounds of talks since March. Adding to the uncertainty, US Commerce Secretary Howard Lutnick recently claimed that the deal stalled due to a lack of direct engagement between Prime Minister Narendra Modi and Trump. The Trump administration has already imposed tariffs of up to 50% on Indian goods, among the highest levied on any country.
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These developments have kept investors on edge, with emerging markets like India bearing the brunt of global risk aversion.
US Supreme Court verdict on Trump tariff tonight: How Sensex, Nifty may get impacted
Foreign investors continue to sell
Sustained foreign institutional investor outflows added to the market’s weakness. On Thursday alone, foreign investors sold Indian equities worth Rs 3,367 crore, extending their selling streak to a fourth consecutive session after a brief pause earlier in the month. Persistent FII selling has amplified downside pressure, particularly in large-cap stocks, where foreign ownership is high.
Defensive sectors offered limited support, and investors largely stayed on the sidelines, waiting for clarity on global trade policy and geopolitical developments.
Nifty breaks down, volatility rises
From a technical perspective, the damage was equally severe. Ponmudi R, CEO of Enrich Money, said the Nifty lost nearly 2.4% over the week, forming lower highs and lower lows — a classic bearish pattern. The index slipped below key short-term moving averages, with momentum indicators pointing to continued weakness.
He noted that while mild buying emerged near 25,623 levels, the lack of strong volumes prevented any meaningful recovery. Immediate support lies around 25,600, with a stronger base near 25,500, while 26,000 now acts as a major resistance zone.
Vinod Nair, Head of Research at Geojit Investments, said markets remain stuck in a consolidation phase due to weak global cues, rising bond yields and persistent FII outflows. He added that uncertainty around US–India tariff negotiations and geopolitical tensions has intensified domestic risk-off sentiment, even as India’s GDP growth outlook and Q3 earnings remain supportive.
Nilesh Jain, Head of Technical and Derivatives Research at Centrum Broking, pointed out that the Nifty slipped below the 25,700 mark and faced stiff resistance near its 50-day moving average. He warned that momentum indicators have generated sell signals on both daily and weekly charts, while India VIX jumped 16% during the week, signalling rising fear in the market.
Big event to watch tonight
Investors are now closely watching a crucial global event. The US Supreme Court is set to deliver a landmark ruling on the legality of sweeping tariffs imposed by Trump under the International Emergency Economic Powers Act.
What should investors do now?
Market experts advise caution rather than panic. While near-term sentiment remains fragile, several analysts believe the current fall is corrective rather than a complete trend reversal. Long-term investors are being advised to avoid aggressive buying, focus on high-quality stocks, and stagger investments gradually. Short-term traders, meanwhile, are advised to stay light, respect stop-loss levels and brace for continued volatility until global clarity emerges.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, there is a high probability of the verdict going against Trump, but the market reaction will depend on whether the tariffs are partially struck down or declared entirely illegal. The verdict could either spark a sharp relief rally or deepen volatility.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)