Benchmark equity indices fell to their lowest levels in about two months on Friday, dragged down by metal, IT services and telecom stocks amid renewed concerns over US tariff measures.
Falling for the second straight session, the Sensex declined by 585.67 points or 0.72 percent to close at 80,599.91. During intraday trading, it fell as much as 690.01 points, or 0.84 percent reaching a low of 80,495.57.
The Nifty also witnessed a decline, dropping 203 points, or 0.82 percent, to settle at 24,565.35. Intraday, it touched a low of 24,535.05—down 233.3 points or 0.94 percent—a level last seen on June 4, when it hit a low of 24,530.45.
Tata Steel, Maruti, Tata Motors, Infosys, Bharti Airtel and Tech Mahindra were also among the laggards.
Here are the key factors behind market decline
1) US tariffs on Indian exports: Investor sentiment was dented after US President Donald Trump issued an executive order titled ‘Further Modifying The Reciprocal Tariff Rates’, imposing a 25 percent “Reciprocal Tariff, Adjusted” on Indian exports. The list includes tariff revisions for nearly 70 countries. The order, however, did not specify additional penalties previously mentioned in relation to India’s purchases of Russian defence and energy equipment.
2) Sustained FII selling: Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth Rs 5,588.91 crore on Thursday. Continued capital outflows have added pressure on domestic markets.
3) Global market weakness: Asian markets were largely in the red, with indices in South Korea, Japan, China and Hong Kong trading lower. The negative trend followed weak closing on Wall Street, and US futures indicating a subdued start, further dampening investor confidence.
4) Volatility index rises: The India VIX, a measure of market volatility, climbed nearly 4 percent to 11.98. A higher VIX signals increased uncertainty and risk aversion among traders, often leading to cautious positioning and reduced participation.
5) Pharma stocks under pressure: The Nifty Pharma index declined over 3 percent, marking its third straight session of losses. Sun Pharma led the losses with a 4 percent fall, followed by declines in Aurobindo Pharma, Gland Pharma, Cipla, Granules India and Lupin. Concerns were triggered by Trump’s letters to 17 major global pharmaceutical firms, urging them to lower drug prices in the US to match international levels. The letters also called for Most Favored Nation (MFN) pricing to be adopted within 60 days.
Pharma stocks slump as Trump shoots letters to 17 global drug majors seeking lower prices
Technical view
Nifty witnessed another sharp decline as it failed to reclaim the 200-DMA on the hourly chart, despite a strong recovery on Thursday. Throughout the day, the index remained below the 50-EMA on the hourly timeframe.
Rupak De, Senior Technical Analyst at LKP Securities noted, "On the daily chart, it has broken below the recent consolidation support at 24,600. Sentiment remains weak, with the potential for the correction to extend towards 24,400–24,450. A further decline is likely if it slips below 24,400; otherwise, a recovery can be expected. On the higher side, resistance is seen at 24,600–24,650 and 24,850."
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