Sensex, Nifty Suffer Biggest Weekly Drop in 3 Months on Tariff Fears

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AuthorAnanya Iyer|Published at:
Sensex, Nifty Suffer Biggest Weekly Drop in 3 Months on Tariff Fears
Overview

Indian equity benchmarks, Sensex and Nifty, recorded their steepest weekly decline in over three months. Heightened trade tariff concerns, particularly US sanctions targeting countries dealing with Russia, alongside significant Foreign Portfolio Investor (FPI) selling, triggered a broad market sell-off. Heavyweight stocks saw substantial drops, wiping ₹13.5 trillion from the market capitalization of BSE-listed firms for the week.

Indian equity benchmarks posted their steepest weekly decline in over three months on Friday, rattled by escalating trade tariff tensions and a broad sell-off in index heavyweights.
The Sensex concluded the session down 605 points, or 0.7 percent, at 83,576. The Nifty fell 194 points, or 0.8 percent, to close at 25,683.
Both indices shed 2.5 percent for the week, marking their most significant fall since late September 2025. The total market capitalization of Bombay Stock Exchange (BSE)-listed firms plummeted by ₹13.5 trillion over the week, ending at ₹468 trillion.

Geopolitical Tensions Fuel Tariff Fears

Renewed concerns over US trade tariffs intensified this week. A statement by US Senator Lindsey Graham on Wednesday indicated President Donald Trump had approved legislation allowing sanctions on countries doing business with Russia.
This bill could empower Trump to impose tariffs of up to 500 percent on imports from nations, including India, that purchase Russian oil. The US had previously accused India of supporting Russia's war efforts, imposing a 50 percent tariff last year.

Heavyweights Lead the Decline

Friday's declines were significantly influenced by major banking stocks. ICICI Bank and HDFC Bank were prominent drags on the Sensex. HDFC Bank experienced its largest weekly drop since January 19, 2024, losing 6.3 percent amid investor apprehension regarding its deposit growth trajectory.
Reliance Industries also posted a substantial weekly loss, shedding 7.3 percent, its biggest weekly fall since early October 2024.

Investor Flows and Market Sentiment

Foreign Portfolio Investors (FPIs) were net sellers this week, offloading equities worth ₹3,769 crore. In contrast, domestic institutional investors provided some support, showing net buying of ₹5,596 crore.
UR Bhat, co-founder of Alphaniti Fintech, stated that tariff worries and geopolitical tensions are weighing on sentiment and FPI selling, overriding corporate results unless a significant shock occurs. Global cues are expected to dictate market movements.

Near-Term Outlook and Volatility

Vinod Nair, head of research at Geojit Investments, anticipates persistent near-term volatility, particularly for US-exposed sectors like metals and oil & gas. However, he noted that strong domestic fundamentals, resilient GDP growth, and robust credit trends could support selective buying.
Key monitorables include FII flows and currency movements. Positive outcomes from India-US trade discussions or easing tariff concerns could spur a short-term rebound. Markets are projected to trade range-bound with a mixed bias, balancing external risks against domestic strengths.
The market breadth was weak on Friday, with 3,196 stocks declining against 993 advancing.

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