Sensex, Nifty Log Fifth Straight Weekly Drop: Trump Tariffs To Q1 Results—5 Key Factors That Dragged Markets

Stock Market Today: Domestic equity benchmarks Sensex and Nifty 50 settled lower on Friday, Aug. 1, logging their fifth straight weekly loss - the longest losing streak in two years. The frontline indices mirrored global risk-off sentiment triggered by weak international cues and sustained foreign capital outflows. The US hit trading partners with steep tariffs and also reaffirmed a 25% duty on India, stoking global growth worries.

Deep losses in metal, IT and telecom stocks amid trade-related concerns further dragged the indices. In a volatile trade, the 30-share BSE Sensex fell 585.67 points or 0.72% to settle at 80,599.91.The NSE Nifty 50 declined 203 points or 0.82% to 24,565.35. Sensex dropped 863.18 points or 1.05%, and Nifty fell 271.65 points or 1.09% in the last five trading sessions. The broader small-caps and mid-caps declined 3.4% and 2.4%, respectively, for the week.

"Domestic equity market navigated a volatile week marked by heightened uncertainty surrounding trade negotiations and subdued earnings. The market oscillated between cautious optimism and defensive positioning, ultimately ending lower due to a persistent FII outflow," said Vinod Nair, Head of Research, Geojit Investments Ltd.

US-exposed Nifty IT slipped 2.7% for the week after tariffs and inflation worries triggered demand concerns. Nifty Pharma shed 2.9% on the week after Trump pushed drugmakers to slash prescription prices, intensifying price pressures. In contrast, consumer stocks rose 3% this week, led by Hindustan Unilever Ltd and Varun Beverages after strong June-quarter earnings boosted hopes of a gradual demand revival.

"With global headwinds, investors showed a preference for domestically driven stories with non-discretionary appeal, as broader sentiment turned selective. FMCG stocks stood out, benefiting from attractive valuations and insulation from external shocks, particularly amid escalating tariff threats," added Geojit's Vinod Nair.

US President Donald Trump unveiled sweeping new tariffs on dozens of countries, including 25% duties for goods from India, marking a new era of American protectionism that triggered fresh tensions and concerns over a much wider disruption in the global trade landscape.

The Indian stock market suffered a knee-jerk reaction the 25% tariff jolt on Thursday, which coincidentally was the expiry day, raising volatility. Even so, given the short-term volatility, D-Street remain divided over the impact of US tariffs on the market. Some do not expect 'any major reaction'.

The US president signed an executive order that raised tariffs for over five dozen countries, with Washington's negotiations for trade deals going down to the wire. While Aug. 1 was the tariff deadline, the new levies will come into effect from Aug. 7.

"Since the date of implementation of the modified tariff rates is Aug. 7, that gives countries time to negotiate and bring the tariffs down. Yesterday’s session indicated that the market views the 25% tariff as a short-term issue. The rate may come down after next round of negotiations beginning this month," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Major blue-chip companies announced their April-June quarter results fiscal 2025-26 (Q1FY26) this week, including Coal India, Vedanta, ITC, Swiggy, HUL, among others. The consumer pack delivered better results than the IT companies. Analysts say tariff and global developments intensified investor anxiety, already impacted by weak Q1 earnings from key index constituents.

However, experts believe India Inc earnings growth will improve starting from the second quarter. "Most corporate commentaries signaled margin pressures and demand slowdown, further dampening sentiment," said Vishnu Kant Upadhyay, AVP - Research & Advisory, Master Capital Services.

Foreign portfolio investors have sold Indian stocks for nine consecutive sessions, with July outflows reaching Rs 17,741 crore, the highest since February. "Investor sentiment weakened as FIIs now hold the second-highest net short position in derivatives, reflecting elevated caution," said Geojit's Vinod Nair.

According to Dr VK Vijaykumar, the sustained selling by the FIIs continues to be a negative. The sharp surge in the dollar index to 100 will nudge the FIIs to continue selling putting pressure on largecaps too. The US dollar index jumped to 100.26 on Friday, its highest level since May 29 this year.

India's high market valuation is a worry for foreign investors who prefer cheaper markets. Nifty 500 stocks advance-decline ratio stood at 1:4, reflecting heavy selloff in mid- and small-cap stocks. "An important trend is the weakness in the broader market, particularly the smallcaps. This trend is likely to continue given the high valuations of the segment," noted Dr VK Vijaykumar.

Geojit's Vinod Nair also highlighted that globally, markets remained under pressure due to rising US inflation and hawkish signals from the US Fed and BoJ, dampening hopes of immediate easing of interest rates, which weighed heavily on emerging markets (EMs). Foreign investors have often flocked to Chinese markets over cheaper valuations.

Analysts said the market consistently faced selling pressure at higher levels during the week. On Friday, Nifty hit a two-month low, closing below the 24,600 mark. Technically, on daily charts, the market is holding a lower top formation.

"On weekly charts, it has formed a bearish candle. The market is trading below the 50-day and 20-day Simple Moving Averages (SMA), which is negative," said Amol Athawale, VP-Technical Research, Kotak Securities.

According to Rupak De, Senior Technical Analyst at LKP Securities, on the daily chart, it has broken below the recent consolidation support at 24,600.

"Sentiment remains weak, with the potential for the correction to extend towards 24,400–24,450. A further decline is likely if it slips below 24,400; otherwise, a recovery can be expected. On the higher side, resistance is seen at 24,600–24,650 and 24,850," said De.

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