The Indian stock market slumped sharply on Thursday, August 28, after a fresh round of United States tariffs came into effect, dragging the benchmark Sensex down by nearly 700 points.
The fall wiped out nearly ₹4 lakh crore in investor wealth, as weak earnings, foreign capital outflows and stretched valuations compounded the sell-off.
The Sensex plunged about 1 per cent to an intraday low of 80,093.52, while the NSE Nifty 50 index also slipped nearly 1 per cent to 24,507.20.
Both the BSE Midcap and Smallcap indices fell more than 1 per cent each during the session. By 9:30 a.m., the Sensex was down 638 points, or 0.79 per cent, at 80,148, while the Nifty 50 was 187 points, or 0.76 per cent, lower at 24,525.
The market capitalisation of BSE-listed companies dropped to nearly ₹445 lakh crore from ₹449 lakh crore in the previous session, making investors poorer by about ₹4 lakh crore.
Analysts said the steep fall was triggered by new tariffs announced by U.S. President Donald Trump, which came into force on Wednesday. Duties on Indian goods exported to the United States have now risen to 50 per cent, hitting investor confidence hard.
The development has come amid an already cautious market mood, weighed down by persistent foreign selling, lacklustre earnings and concerns over valuation levels.
In late July, Trump imposed a 25 per cent tariff on Indian goods, followed by another 25 per cent duty in early August, citing India’s alleged direct and indirect import of oil from Russia.
Markets had expected New Delhi to strike an understanding with Washington before the 27 August deadline, but with tariffs now fully implemented, sentiment has worsened.
U.S. Treasury Secretary Scott Bessent said Wednesday he believed both countries would “come together” to find a resolution to the tariff dispute.
Foreign institutional investors (FIIs), however, have continued to withdraw from Indian equities.
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Data showed FIIs sold shares worth ₹34,733 crore in the cash segment in August so far, after pulling out ₹47,667 crore in July. A Nomura report noted Indian equities are now the most underweight allocation for emerging market investors, with funds diverted to Taiwan, Hong Kong/China and South Korea.
Experts have long warned that stretched valuations in the Indian market, coupled with weak earnings, are keeping indices range-bound. Concerns remain that Trump’s tariff aggression could further delay the anticipated earnings revival expected in the latter half of the year.
Although the direct impact on India’s economy may be limited, a global slowdown triggered by U.S. trade disputes could hurt equities indirectly.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the market faced “the real challenge” of high valuations and tepid earnings growth, though aggressive buying by domestic institutional investors (DIIs) was providing some support.
He advised investors to consider shifting funds from overvalued small-cap stocks to large-cap shares tied to domestic consumption.
Technical indicators also pointed to weakness. Nirmal Bang Retail Research noted that the Nifty had broken below 24,640 support, with potential downside towards 24,500.
Reliance Securities said the index had slipped under its 20-day simple moving average of 24,739, with immediate support at 24,416. If this level breaks, it warns, Nifty may retest 24,200. On the upside, resistance is likely near 24,900–25,000.
Amruta Shinde, Technical and Derivative Analyst at Choice Equity Broking, said a decisive move above 24,850 could open the way for gains towards 25,000 and 25,150. On the downside, support is placed at 24,670 and 24,500.
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