Markets Slide as U.S. Tariff Threat Drags Nifty and Sensex Lower
The downturn came as the U.S. administration followed through on plans to raise tariffs on Indian goods from 25 percent to 50 percent, citing New Delhi’s continued purchases of Russian oil.
Indian equity markets extended losses on Tuesday, August 26, 2025, as investors turned cautious ahead of a steep increase in U.S. tariffs on Indian exports set to take effect on August 27. At 11:01 a.m. IST, the BSE Sensex was down around 600 points at 81,031, while the NSE Nifty 50 shed nearly 180 points to trade just below 24,800. The losses were broad-based, with banks, metals and pharmaceuticals among the worst-hit sectors, and mid- and small-cap indices also slipping about one percent each, reflecting a cautious mood across the market.
The downturn came as the U.S. administration followed through on plans to raise tariffs on Indian goods from 25 percent to 50 percent, citing New Delhi’s continued purchases of Russian oil. The move, announced earlier this month, has heightened concerns about trade frictions and the potential earnings impact on exporters. The tariff announcement weighed heavily on market sentiment, erasing most of the gains made in August and adding to a series of headwinds facing investors, including foreign institutional investor (FII) selling, rupee weakness, a global equity slump and firm crude oil prices.
Analysts noted that despite the sell-off, the correction is unlikely to deepen significantly in the absence of major domestic triggers. Pankaj Pandey, head of retail research at ICICI Securities, observed that the market reaction, while sharp, was largely a reflection of sentiment and not a surprise event and that they do not expect deeper correction from hereon. Market watchers highlighted that robust domestic institutional investor inflows and steady liquidity have been key drivers of resilience, offsetting persistent FII outflows and keeping valuations elevated.
Among notable stocks, Reliance Industries, which carries significant weight on the Nifty, slipped around one percent despite UBS resuming coverage on the stock with a “buy” rating and a price target of ₹1,750, implying a 24 percent upside from Monday’s close. Titan also traded lower, in line with the weak market mood, even as Bernstein initiated coverage with an “outperform” rating and a target price of ₹4,200, citing its strong long-term growth prospects and leadership in India’s jewellery and lifestyle sectors. Sai Life Sciences fell as much as four percent after reports that TPG Asia had offloaded its entire 15.2 percent stake in the Hyderabad-based company through block deals worth nearly ₹2,810 crore. On the upside, consumer goods stocks outperformed the market, with modest gains of around 0.3 percent, reflecting their defensive nature amid broader volatility.
From a technical perspective, analysts said the Nifty’s immediate support level at 24,800 remains crucial. Sustaining above this threshold could limit further downside, while a decisive break below it could trigger deeper corrections. The index has been consolidating between a swing high of 25,150 and a swing low of 24,850, a range that reflects muted directional strength. Renewed call writing at higher strikes and sustained put additions suggest a continuation of sideways trade unless there is a breakout above 25,150 or a breakdown below 24,800. In this environment, a “sell-on-rise” strategy is seen as prudent, with traders watching tariff developments closely ahead of the August 27 implementation.
Tuesday’s losses marked a sharp reversal from last week’s positive momentum, which saw the Nifty briefly breach the 24,950 level and the Sensex notch a gain of over 300 points on hopes of a U.S. interest rate cut. However, global volatility, geopolitical uncertainty, and trade tensions have re-emerged as dominant themes, tempering investor appetite for risk. Analysts believe domestic markets are likely to remain volatile but supported by structural liquidity flows, which could prevent a steep downturn despite heightened near-term uncertainty.
With the U.S. tariff increase just a day away, markets are expected to see choppy sessions in the near term, with traders awaiting clarity on trade negotiations and the broader global macroeconomic outlook. The Supreme Court’s upcoming hearing schedules, the rupee’s trajectory, and crude oil price movements will also remain on investors’ radar as they navigate a volatile week.