Stock market declines for 2nd month as US tariffs weigh on sentiment

Sensex and Nifty fell for a second month as US tariffs hit sentiment, though GST reform hopes and rating upgrade cushioned the slide

Domestic markets fell for a second straight month with optimism around rationalisation in goods and services tax (GST) failing to offset optimism stoked by imposition of heavy tariffs by the US.

  The Sensex declined 1.7 per cent, while the Nifty dropped 1.4 per cent. The broader markets posted sharper losses, with the Nifty Midcap 100 falling 2.9 per cent and the Nifty Smallcap 100 declining 4.1 per cent. 

Investor sentiment was hit with the imposition of a 25 per cent tariff on Indian goods by the US, followed by an additional 25 per cent levy targeting India’s purchase of Russian energy. 

The additional tariffs, announced this month and implemented from Wednesday, are expected to impact sectors heavily reliant on exports to the US, including textiles, gems and jewellery, and marine products. While these sectors don’t have high representation in the market, experts warned of a spillover effect on the broader economy. 

The Union government's commitment to comprehensive GST reforms and India’s first sovereign credit rating upgrade in nearly two decades helped mitigate some losses. Automobile and consumer durable stocks saw huge buying interest on optimism that GST cuts will spur demand. 

Foreign portfolio investors pulled out ₹22,751 crore during the month. Domestic institutional investors pumped in ₹83,341 crore, which failed to lift the markets. India’s market capitalisation fell by ₹6 trillion to ₹444 trillion.