ET Market Watch: Why Indian markets crashed - Trump tariffs & Rs 27,000 crore FII selloff explained
Hi, you're listening to ET Markets Radio. I'm your host, Neha Vashishth Mahajan. Welcome to a fresh episode of ET Market Watch, where we bring you the latest from the world of stock markets every single day. Let's get to it.
Indian equity markets ended the week deep in the red. The Sensex slipped 586 points, while the Nifty closed below 24,570.
But what exactly triggered this market meltdown?
Let's break down the six key reasons:
Reason 1: Trump's Tariff Bombshell
U.S. President Donald Trump imposed a sweeping 25% tariff on Indian exports.
Even though India avoided further penalties, the announcement rattled investors and revived trade war fears.
Reason 2: Relentless FII Selling
Foreign Institutional Investors have been dumping Indian stocks for 9 straight sessions.
The total outflow? A massive ₹27,000 crore.
On Thursday alone, they sold ₹5,589 crore.
FIIs have also built a record 90% short positions — the most bearish setup since March 2023.
Reason 3: Weak Global Cues
Asian markets fell across the board — with indices in Japan, China, Korea, and Taiwan all trading lower.
The MSCI Asia ex-Japan index dropped 1.5%, while European markets and U.S. futures also showed weakness.
Investors globally are turning risk-averse.
Reason 4: Dollar Index Surge
The U.S. dollar index climbed past 100, its highest in two months.
This has intensified FII outflows and raised the cost of foreign borrowing for Indian corporates.
Reason 5: Pharma Stocks Under Pressure
The White House urged 17 major drugmakers, including Indian pharma giants, to cut U.S. prescription prices.
Sun Pharma fell 4.5% after a downgrade, dragging down the entire Nifty Pharma index by 3.3%.
Reason 6: Technical Breakdown
From a technical standpoint, the Nifty broke below key support at 24,600.
Analysts now see the next stop between 24,400 and 24,180.
On the upside, 24,800 to 25,000 will act as a major hurdle.
So what's the bottom line?
A potent mix of trade tensions, relentless FII selling, and technical weakness is dragging the market lower.
Experts advise caution and a hedged approach until clear reversal signals emerge.
That's all from me today.
This is Neha Vashishth Mahajan, and you've been listening to ET Markets Radio. Stay tuned and stay informed.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scroll.in
25 minutes ago
- Scroll.in
Trump's revised tariffs will reduce GDP of several countries, including the US
The global rollercoaster ride of United States trade tariffs has now entered its latest phase. President Donald Trump's April 2 'Liberation Day' announcement placed reciprocal tariffs on all countries. A week later, amid financial market turmoil, these tariffs were paused and replaced by a 10% baseline tariff on most goods. On July 31, however, the Trump Administration reinstated and expanded the reciprocal tariff policy. Most of these updated tariffs are scheduled to take effect on August 7. To evaluate the impact of these latest tariffs, we also need to take into account recently negotiated free trade agreements (such as the US-European Union deal), the 50% tariffs imposed on steel and aluminium imports, and tariff exemptions for imports of smartphones, computers and other electronics. For selected countries, the reciprocal tariffs announced on April 2 and the revised values of these tariffs are shown in the table below. The revised additional tariffs are highest for Brazil (50%) and Switzerland (39%), and lowest for Australia and the United Kingdom (10%). For most countries, the revised tariffs are lower than the original ones. But Brazil, Switzerland and New Zealand are subject to higher tariffs than those announced in April. In addition to the tariffs displayed above, Canadian and Mexican goods not registered as compliant with the US-Mexico-Canada Agreement are subject to tariffs of 35% and 25% respectively. Economic impacts The economic impacts of the revised tariffs are examined using a global model of goods and services markets, covering production, trade and consumption. A similar model was used to assess the impacts of the original reciprocal tariffs and the outcome of a US-China trade war. GDP impacts of the tariffs are displayed in the table below. The impacts of the additional tariffs are evaluated relative to trade measures in place before Trump's second term. Retaliatory tariffs are not considered in the analysis. An economic own goal The tariffs reduce US annual GDP by 0.36%. This equates to US$108.2 billion or $861 per household per year (all amounts in this article are in US dollars). The change in US GDP is an aggregate of impacts involving several factors. The tariffs will compel foreign producers to lower their prices. But these price decreases only partially offset the cost of the tariffs, so US consumers pay higher prices. Businesses also pay more for parts and materials. Ultimately, these higher prices hurt the US economy. The tariffs decrease US merchandise imports by $486.7 billion. But as they drive up the cost of US supply chains and shift more workers and resources into industries that compete with imports, away from other parts of the economy, they also decrease US merchandise exports by $451.1 billion. Global impacts For most other countries, the additional tariffs reduce GDP. Switzerland's GDP decreases by 0.47%, equivalent to $1,215 per household per year. Proportional GDP decreases are also relatively large for Thailand (0.44%) and Taiwan (0.38%). In dollar terms, GDP decreases are relatively large for China ($66.9 billion) and the European Union ($26.6 billion). Australia and the United Kingdom gain from the tariffs ($0.1 billion and $0.07 billion respectively), primarily due to the relatively low tariffs levied on these countries. Despite facing relatively low additional tariffs, New Zealand's GDP decreases by 0.15% ($204 per household) as many of its agricultural exports compete with Australian commodities, which are subject to an even lower tariff. Although the revised reciprocal tariffs are, on average, lower than those announced on April 2, they are still a substantial shock to the global trading system. Financial markets have been buoyant since Trump paused reciprocal tariffs on April 9, partly on the hope that the tariffs would never be imposed. US tariffs of at least 10% to 15% now appear to be the new norm. As US warehouses run down inventories and stockpiles, there could be a rocky road ahead.
The Wire
25 minutes ago
- The Wire
Trump Considering Hiking 25% Tariff on India ‘Very Substantially' in Next 24 Hours
He also said that New Delhi's ostensible offer to lower its tariffs to zero is 'not good enough' if it keeps buying Russian oil. New Delhi: US President Donald Trump has reiterated his intention to levy a tariff on Indian goods 'very substantially' higher than the 25% he announced last week, repeating his stance that he is unhappy with India's purchases of Russian oil even as Moscow continues its war with Ukraine. In an interview to CNBC Television on Tuesday (August 5), Trump also claimed that while New Delhi has agreed to charge 'zero tariffs' on American goods, its offer is 'not good enough' as long as it continues to buy oil from Russia. A day prior, Trump had said he would 'substantially raise' his 25% tariff on India – scheduled to go into effect on Thursday – because it was 'not only buying massive amounts of Russian Oil' but selling much of this 'on the Open Market for big profits', drawing a rejoinder from the Ministry of External Affairs , which pointed to Washington as well as the EU's continuing economic links with Moscow. Speaking to CNBC, Trump said on Tuesday that he was considering raising his 25% tariff on India 'very substantially over the next 24 hours' because of its purchases of Russian oil. 'So we settled on 25%, but I think I'm gonna raise that very substantially over the next 24 hours, because they're buying Russian oil, they're fuelling the war machine. And if they're going to do that, then I'm not going to be very happy,' he told the channel. Adding that India's tariffs on the US were too high, the president continued: 'Now I will say this. India went from the highest tariffs ever–they will give us zero tariffs … But that's not good enough, because of what they're doing with oil.' Trump on July 30 announced that India would pay a 25% tariff as well as a yet-undisclosed 'penalty' for buying energy and military equipment from Russia. This levy was to kick off two days later, but the executive order Trump signed deferred the date of its implementation to August 7. In a post on his Truth Social platform on Monday, Trump blamed India for not caring 'how many people in Ukraine are being killed by the Russian War Machine', adding that because of its dealings with Moscow he would be 'substantially raising the tariff paid by India to the USA'. New Delhi, which had stuck to its cautious approach to the issue when Trump announced the tariff and also went on to call India's economy 'dead', responded by accusing Washington and Brussels of 'targeting' India in an 'unjustified and unreasonable' manner. Charging the US with 'actively encouraging' its imports of Russian oil shortly after Moscow's invasion of Ukraine in early 2022, the Ministry of External Affairs pointed to the US as well as the EU's continuing trade with Russia in various sectors after the latter's invasion began. 'In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,' it said in a statement. Citing the US's trade deficit with India as well as the latter's high tariffs, Trump had unveiled a 26% 'reciprocal' tariff on India earlier this year but deferred it pending the completion of negotiations over a trade deal. Talks pursuant to that deal are ongoing but New Delhi's resistance to opening up its dairy and agricultural sector to America is reportedly a sticking point. There is no sign of a deal yet even as Trump has claimed on more than one occasion that India has agreed to lower its tariffs. Bilateral ties have also taken a hit amid Trump's repeated claims – consistently denied by India – that he mediated a ceasefire to the Indo-Pakistani military conflict in May by using trade with the two countries as leverage. The perception of a tilt towards Pakistan was reinforced when Trump hosted a luncheon for Pakistan's army chief , Field Marshal Asim Munir, and more recently taunted India after finalising a trade deal with Islamabad that includes the development of its 'massive' oil reserves. Meanwhile, India since 2022 has emerged as a top buyer of Russian crude oil – which has come under heavy sanctions from the US and its allies. Russia now accounts for nearly 40% of India's oil imports, while Delhi is currently Moscow's second-largest buyer after China. The tariffs have also cast a cloud over the two sides' burgeoning defence partnership. This article went live on August fifth, two thousand twenty five, at fifty-nine minutes past nine at night. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.
Indian Express
25 minutes ago
- Indian Express
Zelenskyy speaks with Trump ahead of Putin ceasefire deadline
Ukrainian President Volodymyr Zelenskyy said on Tuesday that he had had a 'productive' conversation with his US counterpart Donald Trump on ending the war, sanctions on Russia and the finalisation of a US-Ukraine drone deal. Trump, who has signalled frustration with Vladimir Putin in recent weeks, has given the Russian president until August 8 to make peace in Ukraine or face tougher sanctions. 'President Trump is fully informed about Russian strikes on Kyiv and other cities and communities,' Zelenskyy wrote on X, referring to intensifying drone and missile attacks. Trump has threatened to hit Russia with new sanctions and impose 100% tariffs on countries that buy its oil, but sources close to the Kremlin told Reuters that Putin was unlikely to bow to the ultimatum. Zelenskyy said Ukraine was also ready to conclude a deal with the US on the purchase of Ukrainian drones that would amount to 'one of the strongest agreements'. He had earlier said the deal was worth around $30 billion. Ukraine is increasingly seeking financing and investment from its foreign partners to bolster its burgeoning domestic arms industry. Zelenskyy said Kyiv's European partners had so far pledged to buy more than $1 billion in US weapons for Ukraine as part of a new scheme.
