The Indian stock market experienced a sharp decline on Thursday, July 31, 2025, following the announcement by US President Donald Trump of a 25% tariff on Indian goods. The Sensex tumbled over 600 points, and the Nifty slipped below the 24,700 mark, reflecting a broad-based selloff across sectors.
Impact of Trump's Tariff Announcement
Trump's decision to impose a 25% tariff on Indian imports, effective from August 1, rattled investor sentiment and triggered a risk-averse approach in the market. Furthermore, Trump indicated an additional "penalty" for India's continued energy and defense ties with Russia, adding to the uncertainty. The trends on Gift Nifty also signaled a gap-down start for the Indian benchmark indices, Sensex and Nifty 50. Specifically, the Gift Nifty was trading around the 24,685 level, a discount of nearly 184 points from the Nifty futures' previous close.
This isn't the first time Trump's tariff policies have negatively impacted the Indian stock market. In April 2025, similar tariff announcements led to a significant crash, wiping out a substantial amount of investor wealth.
Market Performance and Investor Sentiment
All 16 major indices opened in the red, with small- and mid-cap stocks witnessing steep declines. The negative sentiment was evident even before the official trading session began, with the Nifty below 24,700 and the Sensex down 600 points at pre-open. D-Street investors reportedly lost over ₹5 lakh crore in just 15 minutes as the Sensex tumbled.
Analysts suggest adopting hedging strategies as the earnings season unfolds, indicating a cautious approach to the market. The market downturn was further worsened by disappointing third-quarter earnings from companies like Natco Pharma, Senco Gold, and Deepak Nitrite. These weak results have raised concerns over corporate growth in India. The ongoing weakness in the rupee amid global economic uncertainties has also contributed to foreign investor outflows.
Global Market Context
The Indian market's fall mirrored a broader trend of sell-offs in Asian equities, triggered by Trump's policies. European markets also experienced slumps as panic selling continued. Trump's tariffs, intended to address what he views as unfair trade practices, have been described as a "medicine" to "fix something," although they have unleashed chaos across global markets.
Key Stocks to Watch
Despite the overall negative sentiment, certain stocks remained active. M&M, Tata Steel, and Jio Financial Services were among the stocks to watch.
Rupee Performance
In addition to the stock market decline, the rupee also opened lower, falling 30 paise to 85.74 against the US dollar.
