Sensex down 300 pts, Nifty below 24,650 amid Trump's tariff threat; FMCG, IT stocks lead decline

Any escalation in tariffs could trigger a negative reaction, with the Nifty potentially breaching the key support level of 24,500, experts say.

Benchmark indices Nifty and Sensex remained under pressure on August 5, though they came off the day’s lows. A sharp afternoon selloff in FMCG, IT, and oil & gas stocks dragged the market lower. However, gains in metals, PSU banks, and select counters helped limit the downside. Midcap and smallcap indices also slipped but performed better than the frontline indices.

At 12:05 pm, the Sensex was down 330.68 points or 0.41 percent at 80,688.04, and the Nifty was down 93.65 points or 0.38 percent at 24,629.10. About 1550 shares advanced, 1852 shares declined, and 135 shares were unchanged.

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"President Trump's latest tweet warning of a substantial hike in US tariffs on India over its Russian oil imports poses a serious risk. If implemented, it could further strain US-India relations and hit Indian exports to the US harder than previously anticipated. Such a move would also weigh on India's FY26 GDP growth and corporate earnings," V K Vijayakumar of Geojit Investments Limited said.

"Markets, which continue to trade at elevated valuations, have yet to price in this potential downside. India’s firm response—that targeting it is "unjustified and unreasonable"—signals a clear intent not to make undue concessions. As a result, the market enters a phase of near-term uncertainty. Any escalation in tariffs could trigger a negative reaction, with the Nifty potentially breaching the key support level of 24,500," he added.

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Sectoral indices were largely in the red in mid-session trade, with only a few pockets showing resilience. Volatility eased slightly, as the India VIX slipped 0.42 percent to 11.92. Among the gainers, Nifty Auto was marginally higher by 0.05 percent, while PSU Bank edged up 0.15 percent. On the downside, Nifty Pharma led the losses with a 0.93 percent drop, followed by Oil & Gas down 0.85 percent and FMCG and IT, both lower by 0.65 percent. Nifty Bank and Private Bank indices also slipped, while broader markets saw the Midcap 100 fall 0.40 percent and the Smallcap 100 by 0.12 percent. Other sectors, including Infra, Media, and Realty, remained under pressure with modest losses.

Insurance regulator IRDAI has imposed a fine of Rs 5 crore on PB Fintech's online insurance aggregator - Policybazaar - over regulatory lapses related to directorships held by key managerial personnel, a company filing said August 5, sending shares lower by close to two percent to the day's low. The penalty is also related to aspects pertaining to its principal officer (PO), product display, Outsourcing Agreements, tagging of policies and premium remittance, PB Fintech added.

The shares of Aditya Infotech made a strong debut on the stock markets on August 5, listing at Rs 1,015 apiece on NSE. This implies a premium of more than 50 percent over the IPO price of Rs 675 apiece. On BSE, the shares however listed with a premium of nearly 51 percent over the IPO price at Rs 1,018 apiece. The stock debuted with a market capitalisation of around Rs 11,900 crore.

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Shares of Paytm parent One97 Communications were down 1 percent as the firm saw a block deal of 1.86 crore shares, involving 2.9 percent of its total equity in trade on Tuesday, August 5. Earlier, reports had suggested that Antfin (Netherlands) Holding B.V., one of the largest shareholders in the financial services firm, was likely to sell its entire 5.84 percent stake worth Rs 3,803 crore or approximately $434 million via the block deal route.

Technical View

Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher said that Nifty staged a pullback and closed above the 24,700 mark, with broader markets also showing signs of recovery. Further gains could be on the cards in the coming sessions. However, for a stronger confirmation of trend reversal, the index must decisively break above its 50-day EMA at 24,906. A sustained move beyond this level could open the door for continued upside.

IndusInd Bank, Bharti Airtel, Grasim, Maruti Suzuki, and Axis Bank were the top gainers on the Nifty. Laggards on the Nifty index included Infosys, Asian Paints, Adani Ports, Reliance Industries, and Bharat Electronics.

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