BSE Sensex and Nifty 50 fell by 1.06% and 1.09%, respectively, marking the fifth consecutive week of declines. Nifty Midcap 150 and Nifty Small Cap 250 dropped by 1.92% and 2.97%, respectively.
The rupee weakened by 1.2% to ₹86.39/USD amid global uncertainty and a stronger dollar index.
Key Drivers
U.S. imposition of a 25% tariff on Indian goods, effective Aug 1, 2025, raised concerns over trade competitiveness, exports, and GDP growth. Uncertainty over India’s crude oil and defense equipment imports from Russia, with no specific penalties imposed but weakened prospects for a U.S.-India trade deal.
Persistent selling by Foreign Institutional Investors (FIIs), offloading over ₹12,000 crore in equities, added downward pressure. Domestic Institutional Investors (DIIs) provided support through sustained capital inflows.
Sectoral Performance
Gainers: Nifty FMCG (+2.9%), driven by strong Q1 FY25 results, urban and rural market recovery, and stable demand.
Losers: Nifty Realty (-5.73%), Nifty Defense (-4.76%), Nifty Metal (-3.42%), Nifty Capital Markets (-3.29%), Nifty Pharma (-2.87%), and Nifty IT (-2.73%).
Global Markets Performance
U.S.: Dow Jones Industrial Average fell 0.74%, S&P 500 slipped 0.37%, driven by mixed Federal Reserve signals on rate cuts.
Europe: FTSE 100 and Germany’s DAX declined by 0.57% and 3.27%, respectively, due to slowing economic growth and Eurozone trade uncertainties.
Asia: South Korea’s KOSPI dropped 3.88%, Hong Kong’s Hang Seng fell 3.47%, and Shanghai Composite declined 0.94%, impacted by U.S.-China tariff tensions and economic growth concerns.
Key Drivers
U.S. tariffs, including a 25% levy on Indian goods effective August 1, 2025, and broader tariff announcements, heightened global trade tensions. Uncertainty over Federal Reserve interest rate policies contributed to market volatility.
Slowing economic growth and tariff-related uncertainties weighed on global markets, with Asia particularly affected by U.S.-China trade frictions.
Debt Market
Yields rose as markets scaled back expectations for near-term rate cuts. Hawkish remarks from the RBI Governor, emphasizing forward-looking assessments of growth and inflation over current levels, dampened investor sentiment for debt securities.
Economic Update
Fiscal deficit for Apr-Jun FY26 reached ₹2.81 lakh crore, or 17.9% of Budget Estimates (BE), compared to 8.4% of BE in the same period of FY25.
Total expenditure stood at ₹12.22 lakh crore, or 24.1% of BE, up from 20.1% of BE in the corresponding period of FY25.
Gross GST revenue grew 7.5% YoY to ₹1.96 lakh crore in Jul 2025, compared to ₹1.82 lakh crore in Jul 2024.
Manufacturing Purchasing Managers' Index rose to a 16-month high of 59.1 in Jul 2025, up from 58.4 in Jun 2025.
Driven by strong gains in new orders and output, though business sentiment and hiring momentum showed signs of weakness.
Gold
Gained nearly 1% despite volatility, supported by a softer U.S. Non-Farm Payroll (NFP) report.
U.S. economy added 73,000 jobs in July (below forecast of 100,000), with unemployment rising to 4.2% from 4.1%. Post-NFP, market expectations for a Federal Reserve rate cut in September rose to 75% from 45%.
President Trump’s 10% global base tariff and up to 41% retaliatory duties on non-trade-agreement countries bolstered bullish sentiment for gold.
Crude Oil
Fell from a multi-week high near $70, pressured by weak U.S. labor market data and economic growth concerns.
Trump’s aggressive tariff stance raised fears of reduced global energy demand. Bearish inventory figures further limited crude’s recent upward momentum.
Silver
Declined nearly 3%, underperforming gold due to weakness in industrial metals and profit-taking. Upcoming ISM services data and labor indicators expected to influence short-term price action.
Best Regards
Alpha Research
Disclaimer: The information on this document is provided for information purpose only and is available in the public domain. It does not constitute any offer, recommendation. The views expressed by the Alpha Capital Research are based on current market conditions and information available publicly.
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