Tariffs cast long shadow on equities, Sensex slips to three-week low

Indian equities extended losses on Thursday as investors assessed the impact of fresh US tariffs on the economy and corporate earnings. The additional 25 per cent duties, announced earlier by US President Donald Trump, came into force on Wednesday, raising the effective levy on several Indian goods to as high as 50 per cent.

 

With markets closed on Wednesday for Ganesh Chaturthi, the reaction came in Thursday’s session. The Sensex closed 706 points, or 0.9 per cent, lower at 80,081, while the Nifty declined 211 points, or 0.9 per cent, to 24,501 — both indices marking their second straight day of losses. The Sensex ended at its lowest level since August 8, while the Nifty had last closed below the current level on August 12. 

The total market capitalisation of BSE-listed companies fell by ₹4.3 trillion to ₹445 trillion. Market participants fear prolonged pressure on export-oriented sectors such as textile, apparel, gems and jewellery, marine products, and leather goods, all heavily reliant on the US market. 

“The steep 50 per cent tariffs will hit India’s textiles and apparel, gems and jewellery, marine (shrimp), leather and footwear the hardest,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services. He added that the government’s move to extend the import duty exemption on cotton until December may provide partial relief for apparel exporters.

 

The US trade action, aimed at penalising India for continued purchases of Russian oil, is part of Washington’s broader strategy to pressure Moscow amid the ongoing war in Ukraine. With five rounds of India–US trade talks failing to yield a breakthrough, investors remain wary of escalating trade frictions. 

On the policy front, New Delhi is counting on goods and services tax (GST) reform proposals and selective duty relaxations to cushion domestic demand and offset external headwinds.

 

“Supportive measures around GST, import duty relaxations, and the broader Swadeshi push are expected to lend resilience to domestic markets,” added Khemka. 

Banks dragged the Sensex lower, with HDFC Bank down 1.5 per cent and ICICI Bank shedding 1.3 per cent. InterGlobe Aviation (IndiGo) fell 5.3 per cent following a promoter stake sale. Export-linked stocks also struggled: Apex Frozen Foods (minus 5.4 per cent), Kitex Garments (minus 5 per cent), Raymond Lifestyle (minus 2.8 per cent), Welspun Living (minus 1.1 per cent), and Avanti Feeds (minus 0.8 per cent).

 

Market breadth was weak, with 2,744 stocks declining against 1,374 advancing. 

Analysts caution that sentiment may remain fragile in the near term. 

Foreign portfolio investors were net sellers to the tune of ₹3,856 crore, while domestic institutions were net buyers of ₹6,920 crore.

 

Going forward, global cues — especially the US Federal Reserve’s policy stance and any indication of tariff rollbacks — will be decisive in shaping market trends. 

“The short-term outlook is weak, though a technical pullback cannot be ruled out. For day traders, 24,600 on the Nifty and 80,600 on the Sensex will be crucial resistance levels. As long as indices remain below these, sentiment will stay negative,” said Shrikant Chouhan, head of equity research, Kotak Securities.