Sensex Crashes 786 Points, Recovers: Trump Tariff Impact, US Fed Policy, and More

The Indian equity markets opened sharply lower on July 31, 2025, after US President Donald Trump announced a 25% tariff on Indian goods, effective August 1. The BSE Sensex tumbled 786 points in the intraday to hit a low of 80,695.15, while the NSE Nifty50 slipped below the 24,700 mark. Twenty-six of the 30 Sensex constituents were trading in red, including Mahindra & Mahindra, Bharti Airtel, Reliance Industries, and ICICI Bank. The market experts see the additional penalty announced by Trump for India's oil imports from Russia as a major risk. The overall trade and investment relationship between India and the US still has room for improvement.

The Indian equity markets opened sharply lower on July 31, 2025, after US President Donald Trump announced a 25% tariff on Indian goods, effective August 1. The BSE Sensex tumbled 786 points intraday to hit a low of 80,695.15, while the NSE Nifty50 slipped below the 24,700 mark. Twenty-six of the 30 Sensex constituents were trading in red, including Mahindra & Mahindra, Bharti Airtel, Reliance Industries, and ICICI Bank. The market experts see the additional penalty announced by Trump for India's oil imports from Russia as a major risk. The overall trade and investment relationship between India and the US still has room for improvement.

The tariff announcement has sparked volatility and concerns among investors and analysts. Nilesh Shah, MD at Kotak Mahindra AMC, described the move as a clear negative for the markets. He hopes that cooler heads will prevail and that a "TACO" (Trade Agreement on Competitive Offerings) deal could still materialize if both sides reassess their red lines. However, Shah also urged India to take this moment to accelerate internal reforms that enhance competitiveness.

Garima Kapoor, EVP at Elara Capital, noted that the new tariff puts India at a disadvantage against export competitors like Vietnam, Indonesia, and the Philippines, which continue to enjoy lower tariff rates into the US market. If pharmaceuticals are included in the tariff ambit, the damage could be significant, as the US accounts for over 30% of India’s pharma exports.

Aditi Nayar, Chief Economist at ICRA, warned that if a trade deal is not reached by September or October, India's full-year GDP growth could see a downward revision of at least 20 basis points. However, she noted that the delay might be a blessing in disguise, as a hotchpotch deal that gave away too much on agriculture and dairy could have had far-reaching political and social costs.

SEBI-registered analyst Rajneesh Sharma highlighted the technical picture, noting that the Nifty index at 24,855 is sitting just above key trendline support. He advised traders to closely monitor support levels such as 24,482, 24,000 to 23,896, and 23,600. Analyst Vinay Taparia noted that while the tariffs will create some market uncertainty, markets tend to price in such events of global and geopolitical uncertainties. He expects certain domestic-focused companies, FMCG firms, and IT companies to remain resilient to the tariff impact.

In summary, the market will have to live with volatility and the hope that this pressure leads to a deal. The overall trade and investment relationship between India and the US still has room for improvement, and experts advise a cautious approach to navigate the uncertainty.

References:
[1] https://m.economictimes.com/markets/stocks/news/trumps-25-tariff-rattles-nifty-futures-how-bad-is-the-news-for-indian-stock-market/articleshow/123001245.cms
[2] https://stocktwits.com/news-articles/markets/equity/trump-tariff-shock-nifty-support-levels-to-watch-july-31/chohHuUR5Cq
[3] https://m.economictimes.com/markets/stocks/live-blog/bse-sensex-today-live-nifty-stock-market-updates-31-july-2025/liveblog/123009003.cms