Indian Markets Fall 2.2% on Tariff Worries; Strong Q1 GDP Seen as Cushion

Mumbai – Indian stock markets ended the week sharply lower, with benchmark indices Nifty and Sensex losing over 2.2% as foreign investor outflows and US tariff concerns triggered broad-based selling.

Metals, IT, realty, and auto stocks fell between 0.5% and 1.5%, while Capital Goods, Consumer Durables, Media, and FMCG posted modest gains of 0.4–1%. Broader markets also slipped, with the Nifty Midcap 100 down 0.57% and the Smallcap 100 lower by 0.39%.

Markets had opened on a strong note, buoyed by GST rationalisation hopes, a favourable monsoon outlook, easing US bond yields, and expectations of a September Fed rate cut. However, sentiment soured ahead of the US penalty tariff deadline, leading to three straight sessions of declines. The imposition of tariffs on Indian goods further weighed on investor confidence, prompting profit-booking across sectors.

“Large caps weakened, while mid- and small caps saw sharper corrections due to stretched valuations and rising uncertainty,” said Vinod Nair, Head of Research at Geojit Investments.

Looking ahead, India’s robust Q1 GDP growth of 7.8%—driven by government spending and supportive policies—may cushion the impact of global headwinds, though fiscal risks remain. Analysts noted that sectors such as textiles, equipment manufacturing, metals, auto, and seafood are most exposed to tariffs, while IT and pharma could face negative sentiment despite being less directly impacted.

Bajaj Broking highlighted 24,400–24,350 as a crucial support zone for Nifty. Holding above this range may allow the index to consolidate between 24,400 and 24,900.

Analysts expect a mixed near-term trend, with consumption-driven sectors like FMCG, Durables, Cement, Infrastructure, and Discretionary likely to benefit from GST cuts, resilient demand, and higher government spending.

With inputs from IANS