Indian stock markets witnessed sharp selling pressure on Thursday as the Sensex crashed over 706 points and the Nifty 50 slipped below the crucial 24,500 mark. The fall was triggered by multiple global and domestic cues, particularly concerns around new U.S. tariffs on Indian goods, which rattled investor confidence.
The 30-share BSE Sensex ended 705.97 points or 0.87% lower at 80,080.57, after dropping as much as 773 points during the day. Meanwhile, the NSE Nifty closed 211.15 points or 0.85% down at 24,500.90, marking its lowest level in three months.
Why Stock Market Fell Today: Impact of U.S. Tariffs on Indian Exports
One of the biggest reasons behind Thursday’s selloff was the 25% additional tariffs imposed by the United States on Indian imports, effective from August 27, 2025. This came just a day after India’s counter 50% tariff on U.S. exports took effect, escalating trade tensions and dampening market mood.
Analysts noted that investor sentiment turned weak as fears of reduced trade competitiveness and rising export costs spread across key sectors, especially banking and IT.
Banking and IT Stocks Lead the Market Selloff
The Nifty Bank index closed below the 54,000 level for the first time since May 9, declining nearly 2,000 points in just four sessions. Heavyweights such as HDFC Bank, ICICI Bank, and Axis Bank dragged the index lower.
The Nifty IT index also fell 1.6% as tech majors like Infosys, HCL Tech, and TCS slipped amid concerns of reduced global demand. Nifty Realty, PSU Banks, FMCG, and Pharma also registered losses, adding to the overall bearish sentiment.
Heavy Investor Wealth Erosion in Two Sessions
In just the last two sessions, investors have witnessed wealth erosion of over ₹10 lakh crore. Mid-cap and small-cap indices underperformed, reflecting heightened risk-off sentiment. However, a few stocks bucked the downtrend—Vardhman Textiles surged 13%, supported by duty-free cotton imports, while Ola Electric gained over 9% with massive trading volumes exceeding 85 crore shares.
ALSO READ| Central Government Extends Import Duty Exemption on Cotton; Textile Stocks Gain
Government’s Cotton Duty Relief Provides Limited Support
In an attempt to ease pressure on the textile sector, the central government extended duty-free cotton imports till December 31, 2025. While the move briefly supported sentiment, it failed to counter the broader pessimism stemming from global tariff issues.
Brent crude prices also eased slightly by 0.62% to $67.63 per barrel, offering some comfort. However, heavy foreign investor outflows—FIIs sold equities worth ₹6,516.49 crore on Tuesday—continued to weigh on the market, even as domestic institutional investors (DIIs) bought shares worth ₹7,060.37 crore.
The Sensex and Nifty crash on August 28 was largely driven by escalating U.S.-India trade tensions, persistent FII outflows, and sectoral weakness in banking and IT. While policy support like cotton import duty exemption gave temporary relief, investor confidence remained fragile. Experts warn that volatility is likely to persist in the near term unless trade concerns ease and global cues turn supportive.
Disclaimer:
The information provided in this blog is for educational and informational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instruments. Stock market investments are subject to market risks. Past performance is not indicative of future results. Readers are advised to consult a qualified financial advisor before making any investment decisions. The author and publisher are not liable for any losses or damages arising from the use of this information.
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