MUMBAI: The Indian stock market faced a brutal selloff on Thursday as investors reacted to the full implementation of U.S. tariffs on Indian goods, with the Sensex and Nifty 50 closing down over 1%. The sharp decline, which follows a similar fall earlier in the week, has analysts warning of sustained pressure on export-oriented sectors.
At the close of trading on Thursday, the S&P BSE Sensex plunged by 849.37 points (1.04%) to finish at 80,786.54, while the NSE Nifty 50 dropped 255.70 points (1.02%) to settle at 24,712.05. The market was closed on Wednesday for Ganesh Chaturthi, making Thursday the first day of trading under the new 50% tariff regime.
Export-Oriented Sectors Take the Brunt
The U.S. has now doubled its tariffs on Indian imports to a total of 50%, a move linked to India’s purchase of discounted Russian oil. According to analysts, this is a direct challenge to India’s key export sectors, which together account for a significant portion of the country’s $48 billion in exports to the U.S.
“This measure has already triggered a sharp selloff and is expected to maintain pressure on the market in the near-term,” said Santosh Meena, head of research at Swastika Investmart. He highlighted that sectors such as textiles, leather and footwear, gems and jewelry, seafood, and chemicals are particularly vulnerable.
The stock performance of companies in these sectors reflected this concern. Textile stocks like Alok Industries Ltd. (-4.13%) and Raymond Lifestyle Ltd. (-3.66%) saw steep declines. In the leather and footwear segment, Zenith Exports Ltd. (-4.33%) was among the top losers. Similarly, gems and jewelry stocks, including Uday Jewellery Industries (-2.49%) and Senco Gold Ltd. (-2.20%), were also hit hard.
Foreign Investors Retreat
The tariff concerns have exacerbated an ongoing trend of capital flight. Foreign portfolio investors (FPIs) have been net sellers, pulling out a significant amount from Indian equities in August, marking the highest outflows since February. According to official data, FPIs sold stocks worth over ₹6,500 crore on Tuesday alone, a trend that is expected to continue.
Analysts note that while the market’s initial reaction is largely sentiment-driven, the long-term impact on export-linked stocks could lead to earnings downgrades. However, they also suggest that the market is unlikely to panic, as many believe the tariffs are a temporary aberration that will eventually be resolved through diplomatic channels. In the meantime, analysts advise investors to shift focus from overvalued export-oriented stocks to more stable, domestic consumption-driven sectors.