Stock market benchmarks Sensex and Nifty came under selling pressure in Friday’s trade, as concerns related to US tariffs, persistent selling by foreign investors, weak Asian cues and muted earnings season weighed in on the market sentiment.
Provisional data showed foreign investors sold equites worth Rs 4,997.19 crore in the cash market on Thursday. FPI selloff in the fist five trading days of August hit Rs 12,404 crore against Rs 17,741 crore outflows for July. Gaurav Mehta SBI Securities said near-term volatility in the market is expected due to global uncertainty and elevated valuations. He has preference for domestic-oriented sectors like banking, capital goods, and consumption.
“Recent moves by the Trump administration mark a sharp shift in US-India trade and geopolitical dynamics, potentially unravelling more than 2 decades of bipartisan progress. The US has paused trade talks and announced 50 per cent duties while extending more favourable terms to China and Pakistan. These actions, along with criticism of manufacturing in India by US companies seems like a significant policy reversal by the US,” said JM Financial.
The brokerage said reports of the Prime Minister Narendra Modi visiting China after six years and India’s national security adviser engaging with Russia on key defence deals suggest there are early signs that India may recalibrate its strategic posture.
“While it’s too early to take hard calls, the risk of a shift in geopolitical alignment is something investors should watch out for very closely,” it said.
On Friday, the BSE Sensex slipped below the 80,000 level at 79,989.50. It was later trading at 80,088.54, down 534.72 points or 0.66 per cent. The NSE Nifty stood at 24,428.05, down 168.10 points or 0.68 per cent.
To be sure, Nifty has delivered a flat return in the past one year, while its FY26 and FY27 EPS have seen cuts of 9 per cent and 7 per cent, respectively. In July, EPS estimates for both FY26 and FY27 saw a MoM decrease of 0.5 per cent, JM Financial noted.
“The only saving grace is the sustained DII buying which remains strong. The strong DII buying assisted by sustained flows into mutual funds can prevent a crash in the market. Investors may wait and watch for the developments on the tariff front to unfold,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Data showed most Asian markets were trading in the red today. Hong Kong’s Hang Seng fell 1.04 per cent while Korean Kospi slipped 0.55 per cent. Chinese markets edged lower. The US Dow Jones Industrial Average index ended 0.51 per cent lower overnight.
Markets globally, meanwhile, are tracking news developments regrading the next US Fed Chair.
“The impact of the appointment of a new Fed governor will likely appear around the year-end holiday season, when the question of continuing rate cuts will be considered. If Kugler’s successor is much more dovish than other members, this could pressure the US bond market’s yield curve to steepen and dollar to weaken,” said Nomura.
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