Market Fall: Sensex Crashes 706 Points, Nifty Slips 212 Amid Trump Tariffs and FII Outflows

Market Fall: Sensex Crashes 706 Points, Nifty Slips 212 Amid Trump Tariffs and FII Outflows

Date: August 28, 2025

Indian equity markets witnessed a sharp decline on Thursday as both benchmark indices—BSE Sensex and NSE Nifty 50—ended deep in the red. The Sensex plummeted by 706 points, while the Nifty 50 sank by 212 points, closing just above the critical 24,500 mark. The sell-off was triggered by multiple global and domestic headwinds, particularly the imposition of punitive tariffs by the U.S. under Donald Trump’s trade policy.

Let’s break down the key factors behind this crash, sector-wise movements, investor sentiment, and what it means for traders going forward.

Reasons Behind Today’s Market Fall :-

Trump’s Tariffs Shock Indian Exporters

The biggest jolt came in the form of a fresh trade blow from the United States. Former President Donald Trump, expected to play a strong role in U.S. trade policy again, imposed 25–50% tariffs on major Indian exports such as gems, textiles, chemicals, seafood, auto parts, and more.

These tariffs are expected to severely dent export earnings and pressure several Indian sectors reliant on U.S. trade. The announcement spooked investors and triggered a wave of risk-off sentiment across the market.

“The timing of the tariffs, combined with expiry-related volatility, created a perfect storm,” said an analyst from Axis Securities.

Massive FII Sell-Off

Foreign Institutional Investors (FIIs) have continued to exit Indian equities amid global uncertainty and strong U.S. dollar inflows. In August alone, FIIs have pulled out over ₹22,000 crore (~$2.66 billion), making it one of the worst outflow months in recent memory.

On Thursday, FII selling intensified further, accelerating losses in large-cap stocks, especially in IT and financials

Weak Global Cues & Asian Market Pressure

Asian markets were mostly in the red due to fears of a slowdown in China and global trade concerns. The Nikkei, Hang Seng, and Kospi all ended lower, adding to bearish sentiment back home.

Global investors also weighed concerns over inflation in Europe and weak PMI numbers from Germany, leading to risk aversion in emerging markets like India.

Derivative Expiry & Technical Breakdown

August 28 marked the monthly F&O expiry, and expiry-day volatility exaggerated the sell-off. Analysts pointed out that Nifty 50 breached important support zones during the day, triggering algorithmic selling.

The index failing to hold 24,700 added to bearish technical signals, with further downside seen if 24,500 is decisively breached in the coming sessions

Export-Oriented Sectors Under Pressure

Sectors with direct exposure to U.S. markets saw intense selling:

• IT stocks tanked as concerns over client spending and outsourcing margins mounted.

• Textile and chemical stocks fell sharply due to anticipated revenue cuts.

• Auto component makers took a hit as export margins are likely to shrink under the new duty structure

Market Snapshot: Closing Figures

India VIX, a measure of market volatility, jumped by nearly 6%, indicating rising fear among traders.

Sectoral Impact

❌ Top Losers

• HCLTech: -2.85%

• Infosys: -1.95%

• TCS: -1.89%

• HDFC Bank: -1.55%

• Kotak Mahindra Bank: -1.45%

✅ Top Gainers (Few and Far Between)

• Titan: +1.22%

• Mahindra & Mahindra: +0.61%

• L&T: +0.27%

• Axis Bank: +0.46%

• Reliance Industries: +0.17%

Out of Nifty 50 stocks, only 5 closed in the green, while 45 ended in the red, showcasing the broad-based weakness.

Investor Sentiment: Fear, Panic, and Profit Booking

Investor mood has shifted drastically in the last two days. The Sensex has now dropped over 1,500 points in just two sessions, which has triggered fresh fears of a short-term correction.

Retail traders and short-term investors are increasingly opting for profit-booking while institutional investors have turned risk-averse. Brokerage houses have advised caution and suggested staying light on leveraged positions

Technical Outlook: Key Levels to Watch

According to Axis Securities and HDFC Securities analysts:

Failure to hold 24,500 could push Nifty toward 24,300 or even 24,150. A sustained break above 24,700–24,774 will be required for any bullish momentum to resume

Expert Views

Nagaraj Shetti, Technical Analyst at HDFC Securities:
“The short-term trend remains negative. Further weakness is likely if Nifty breaks below 24,500 support zone. We may revisit 24,350–24,300 levels quickly.”

Hariprasad K, Livelong Wealth:
“Export-driven sectors like IT and chemicals are under pressure. A bounce may occur, but until Nifty crosses 24,774, we remain cautious.

What Should Investors Do Now?

✅ Short-Term Traders:

• Avoid fresh longs until Nifty holds above 24,700

• Consider hedging or booking profits in volatile sectors

• Monitor VIX closely for signs of risk-off trend reversing

✅ Long-Term Investors:

• Avoid panic selling; India’s macro story remains intact

• Use corrections to slowly add quality stocks with export potential once the dust settles

• Keep an eye on FII flows and global policy announcements

🏁 Conclusion: A Wake-Up Call for Caution

Today’s fall serves as a reminder that global events can abruptly change the course of Indian markets. With Donald Trump’s tariff policies reigniting trade tensions, investors must brace for continued volatility in the short term.

However, India’s long-term growth fundamentals remain robust. The ongoing correction could provide value-buying opportunities—but only after key support levels are confirmed and volatility stabilizes.

As always, stay informed, manage your risk, and avoid emotionally-driven decisions.