The Indian stock market experienced a significant downturn today, August 26, 2025, with both the Sensex and Nifty indices plummeting. The Sensex fell over 650 points, and the Nifty dipped below the 24,800 mark. This decline reflects a pause in the market's recent positive momentum. Several factors contributed to this downturn, creating a complex scenario for investors.
One of the primary reasons for the market's fall is the nervousness surrounding the implementation of additional tariffs by the United States on Indian imports. The U.S. issued a draft notice regarding the implementation of an additional 25% tariff on Indian imports, which President Trump had announced earlier, beginning August 27, 2025. The tariffs are linked to "threats to the U.S. by the government of the Russian Federation," with India being targeted in line with that strategy. These tariffs, set to take effect on August 27, have created uncertainty and apprehension in the market. Concerns are rising that these tariffs could make a significant portion of India's exports to the U.S. commercially unviable.
Global market trends also played a crucial role in the domestic market's performance. Weakness in global markets, coupled with persistent foreign fund outflows, dampened investor sentiment. The trends on Gift Nifty also indicated a negative start for the Indian benchmark index. Moreover, a weak trend in Asian markets further contributed to the overall negative sentiment.
Furthermore, sluggish earnings growth has also contributed to the market's weakness. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market's weakness comes against the backdrop of sluggish earnings growth and external challenges such as high tariffs. Resilient market co-existing with tepid earnings growth has made India the most expensive market in the world. Consequently, Foreign Institutional Investors (FIIs) have been consistent sellers.
Technical analysis of the market also provides insights into the current situation. Sensex formed an inside body candle on daily charts, indicating indecisiveness between bulls and bears. Shrikant Chouhan, Head of Equity Research at Kotak Securities, suggested that the intraday market texture is non-directional, recommending level-based trading strategies for day traders. The Nifty 50 index encountered strong resistance at the 50-DMA, positioned at 25,020. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, noted that the market action indicates an absence of follow-through selling after a sharp weakness, which is a positive sign.
In addition to the factors mentioned above, investors were also cautious in anticipation of the outcome of the PMO meeting over Trump tariffs that was scheduled for today. The Nifty indices displayed a negative picture as trading began, with Nifty Midcap 100 and Nifty Smallcap 100 also declining.
In conclusion, the Indian stock market's decline today can be attributed to a combination of factors, including concerns over upcoming US tariffs, negative global cues, sluggish earnings growth, and technical indicators. Investors are advised to remain cautious and monitor these factors closely.
