Indian equity markets witnessed a brutal sell-off on Tuesday, as investors braced for fresh U.S. tariffs on Indian goods that could reignite trade war tensions. The Trump administration’s move to double import duties to as high as 50%, effective Wednesday, August 27, 2025, triggered panic across Dalal Street and erased nearly ₹6 lakh crore of investor wealth in a single session.
The BSE Sensex tumbled 849.37 points, or 1.04%, to close at 80,786.54, while the NSE Nifty dropped 255.70 points, or 1.02%, to settle at 24,712.05. Broader markets bled even more, with the BSE Midcap index slipping 1.3% and the Smallcap index plunging 1.7%. The total market capitalisation of BSE-listed firms shrank to ₹449 lakh crore, down from ₹455 lakh crore on Monday.
“Indian equities extended losses on Tuesday, weighed down by escalating global trade concerns ahead of the implementation of fresh U.S. tariffs on Indian goods,” said Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal Financial Services. He pointed out that sentiment was further shaken by President Trump’s controversial decision to fire U.S. Fed Governor Lisa Cook on allegations of falsifying mortgage documents, along with threats of new export curbs on chips.
Market nerves were clearly visible as the India VIX, a key volatility gauge, spiked more than 3%, reflecting heightened caution and risk aversion.
Ajit Mishra, SVP (Research) at Religare Broking, noted that export-sensitive sectors bore the brunt of the sell-off. “This pressure was compounded by sustained FII selling, a weakening rupee, and higher crude oil prices, prompting investors to cut risk exposure.”
Data showed that foreign institutional investors (FIIs) dumped equities worth a staggering ₹6,580.13 crore on Tuesday alone.
Among sectoral indices, Nifty FMCG emerged as the lone gainer, up 0.91%, thanks to buying in defensive counters. Meanwhile, heavyweights such as Shriram Finance, Sun Pharma, Tata Steel, Bajaj Finance, and Trent dragged the index lower. On the brighter side, Eicher Motors, HUL, Maruti Suzuki, Nestle India, and ITC managed to end in the green.
Trading will pause on Wednesday due to Ganesh Chaturthi, giving markets a breather before reopening on Thursday. Experts say all eyes will remain on Washington, as any hint of deferring the secondary tariffs could meaningfully improve sentiment. For now, investors remain jittery, balancing fears of a renewed trade war with hopes that diplomacy may soften the blow.
