Trump tariffs weigh heavily on sentiment
The dominant trigger behind the ongoing sell-off has been US President Donald Trump’s renewed tariff-related rhetoric. Markets have remained under pressure since Trump indicated that tariffs on Indian goods could be increased due to India’s continued purchases of Russian crude.The situation worsened after the US also hinted at imposing punitive 500% tariffs on countries importing Russian oil, reigniting fears of a major disruption to global trade flows.
The trade relationship between India and the US has come into sharp focus as negotiations on a bilateral trade deal remain unresolved despite six rounds of talks since March. Adding to the uncertainty, US Commerce Secretary Howard Lutnick recently claimed that the deal had stalled due to a lack of direct involvement between Prime Minister Narendra Modi and Trump. The Trump administration has already imposed tariffs of up to 50% on Indian goods, among the highest levied on any country.
These developments have kept investors on edge, with emerging markets such as India bearing the brunt of global risk aversion.
US Supreme Court ruling on Trump tariffs tonight: How Sensex and Nifty can be affected
Foreign investors continue to sell
The continued outflow of foreign institutional investors contributed to the market weakness. On Thursday alone, foreign investors sold Indian shares worth Rs 3,367 crore, extending their selling streak to a fourth consecutive session after a brief lull earlier this month. Sustained FII selling has added to downward pressure, especially in large-cap stocks where foreign ownership is high.
Defensive sectors provided limited support, and investors largely stayed on the sidelines, waiting for clarity on global trade policy and geopolitical developments.
Nifty breaks down, volatility increases
From a technical perspective, the damage was equally serious. Ponmudi R, CEO of Enrich Money, said the Nifty lost nearly 2.4% this week, forming lower highs and lower lows – a classic bearish pattern. The index fell below key short-term moving averages, with momentum indicators pointing to continued weakness.
He noted that while there was mild buying around the 25,623 levels, the lack of strong volumes prevented a meaningful recovery. Immediate support is around 25,600, with a stronger base around 25,500, while 26,000 now acts as a key resistance zone.
Vinod Nair, head of research at Geojit Investments, said markets remain stuck in a consolidation phase due to weak global cues, rising bond yields and continued financial outflows. He added that uncertainty surrounding US-India tariff negotiations and geopolitical tensions have heightened domestic risk sentiment, even as India’s GDP growth outlook and third-quarter earnings remain supportive.
Nilesh Jain, head of technical and derivatives research at Centrum Broking, pointed out that the Nifty fell below 25,700 points and faced stiff resistance near the 50-day moving average. He warned that momentum indicators have generated sell signals on both the daily and weekly charts, while the India VIX rose 16% over the week, indicating rising fear in the market.
Big event to watch tonight
Investors are now keeping a close eye on a crucial global event. The US Supreme Court will issue a landmark ruling on the legality of Trump’s sweeping tariffs under the International Emergency Economic Powers Act.
What should investors do now?
Market experts advise caution rather than panic. While near-term sentiment remains fragile, several analysts believe the current decline is corrective rather than a complete trend reversal. Long-term investors are advised to avoid aggressive buying, focus on high-quality stocks and gradually diversify their investments. Short-term traders, meanwhile, are advised to stay light, respect stop-loss levels and brace for continued volatility until global clarity emerges.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the verdict is likely to go against Trump, but the market’s reaction will depend on whether the tariffs are partially abolished or declared completely illegal. The verdict could trigger a sharp rebound or increase volatility.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)
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