Indian equities witnessed a sharp downturn on Thursday, August 1, as the Sensex fell over 300 points and the Nifty slipped below the 24,700 mark. Investor sentiment weakened on the back of fresh US tariff actions, persistent FII outflows, weak global cues, and pressure on pharma stocks.
Key Factors Behind the Market Decline
1. Trump’s Tariff Order on Indian Exports
Investor confidence took a hit after US President Donald Trump signed an executive order titled ‘Further Modifying The Reciprocal Tariff Rates’.
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The order imposes a 25% “Reciprocal Tariff, Adjusted” on several Indian export categories.
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It impacts around 70 countries, though India’s defense and energy imports from Russia were not penalized directly in the new directive.
2. Sustained FII Selling
Foreign Institutional Investors continued their selling spree.
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On Thursday, FIIs sold equities worth ₹5,588.91 crore, adding downward pressure to the markets.
3. Weak Global Market Sentiment
Asian markets mirrored Wall Street’s weakness.
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Benchmarks in Japan, South Korea, China, and Hong Kong ended in the red.
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US futures also indicated a subdued start, extending the risk-off mood globally.
4. Volatility Index Rises
The India VIX—a barometer of market volatility—climbed 2% to 11.77.
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A rising VIX indicates increased uncertainty and risk aversion among traders, often resulting in cautious market activity.
5. Pharma Sector Under Pressure
The Nifty Pharma index declined over 2.8%, marking its third consecutive session of losses.
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Sun Pharma plunged 4%, followed by Aurobindo Pharma, Gland Pharma, Cipla, Granules India, and Lupin.
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Pressure mounted after Trump sent letters to 17 global pharmaceutical giants, urging them to reduce drug prices in the US and adopt Most Favored Nation (MFN) pricing within 60 days.
Quick Analysis
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The combination of geopolitical trade moves, capital outflows, and sector-specific pressures has weighed on investor sentiment.
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Rising volatility and global weakness have led to cautious positioning in the short term.
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Pharma, a key defensive sector, coming under pressure adds to near-term uncertainty.
Markets may remain volatile as investors track further developments on US trade policies and FII activity
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