Indian stock market: Indian equities drop as investors book profits amid US tariff concerns

Mumbai: Equities ended lower Friday, snapping a six-day gaining streak, as investors booked profits amid concerns over additional 25% US tariffs on Indian exports taking effect next week. The Centre’s proposed indirect tax streamlining, which boosted the gauges earlier this week, failed to influence the market’s direction in the absence of fresh positive cues.

The Nifty fell 213.65 points, or 0.85%, to close at 24,870.1. The Sensex declined 693.86 points, or 0.85%, to end at 81,306.85. Both benchmark indices have ended the week nearly 1% higher, underpinned by prospects of lower producer levies stoking busy-season consumer demand.

“Markets saw some profit booking on Friday, despite ending the week in positive territory, largely due to global concerns and the potential imposition of an additional 25% tariff on India starting next week,” said Pankaj Pandey, head of fundamental research, ICICI Direct.

Pandey said banking and financial stocks have dragged the large cap recovery, weighed down by persistent foreign fund selling and amid expectations of further rate cuts next year, as lower GST rates cause consumer inflation gauge to head south.

At the beginning of August, the US President put additional tariffs of 25% on top of existing 25% tariffs on Indian goods over its purchases of Russian oil, taking the total levy to 50%–among the highest on any country. The new tariffs will be implemented from August 27.

Foreign portfolio investors net sold shares worth ₹1,623 crore. Domestic institutions were sellers to the tune of ₹329 crore.The Nifty Bank index was one of the top losers on Friday, down 1.1%. Nifty’s Metal, Oil and Gas and FMCG indices declined 0.8-1.2% at close.”Markets appear to have limited upside in the near term, weighed down by weak Q1 earnings, a lack of revival signals for Q2, ongoing tariff concerns, and stretched valuations,” said Siddarth Bhamre, head of institutional research at Asit C. Mehta.

No Follow-Through
Bhamre said while the recent GST rate cuts sparked initial optimism, the limited price impact is unlikely to drive meaningful incremental demand, as reflected in the absence of sustained buying after Monday. Elsewhere in Asia, Japan remained flat, China advanced 1.5%, Hong Kong and South Korea rose 0.9% and Taiwan dropped 0.8%.

The pan-Europe index Stoxx 600 was up 0.2% at the time of going to print.

“We believe most of the negative news is already priced in. Any positive developments in consumption trends or tariff negotiations could support a recovery and further rally,” said Pandey.

He expects the Nifty to hold the 24,500 levels, with resistance around 25,400 levels.

Nifty’s Volatility Index or VIX- known as the market’s fear gauge, went up 3.1% to 11.7 levels on Friday.