On July 31, 2025, Indian stock markets opened under severe pressure after former U.S. President Donald Trump announced a 25% tariff on Indian imports effective August 1, along with additional unspecified penalties, reportedly tied to India’s ties with Russia .
The Sensex dropped by 600–800 points intraday, while the Nifty 50 fell sharply below 24,700 in the opening session, erasing investor wealth worth over ₹5 lakh crore in just 15 minutes .
Investors across sectors such as textiles, pharmaceuticals, auto, and IT rushed to offload shares amid intensified selling pressure .
Late-Day Recovery Amid Resilience
Unlike past crashes, markets staged a partial recovery later in the session. Both indices retraced roughly 700 points from their lows, supported by underlying domestic fundamentals and investor confidence .
The rebound was backed by optimism that trade negotiations (scheduled for mid‑August) could lead to tariff reductions or exemptions, alleviating immediate fears .
Wider Impact and Fallout
The Indian rupee slid toward a five‑month low near ₹87.7 per USD, fuelling speculation about possible Reserve Bank intervention .
In parliament, opposition parties criticized the government, branding the U.S. move a diplomatic setback, and demanded a full debate on the government’s failure to prevent such a harsh tariff .
Economists warned the tariff could cut up to 40 basis points from India’s projected GDP growth in FY 2025–26, especially hurting manufacturing and export‑oriented sectors .
Key Takeaways
Factor Details
Trigger Trump’s surprise announcement of a 25% tariff and linked “penalties” on Indian imports.
Immediate Impact Sharp falls in Sensex and Nifty, ₹5 lakh crore+ wiped off, surge in market volatility.
Recovery Quick rebound driven by belief in upcoming negotiations and domestic investor strength.
Risks Ahead Elevated volatility, export sector stress, dampened investor sentiment, and geopolitical friction.
Analysts warn that while the market may stabilize in the short term, renewed uncertainty lies ahead until clarity emerges from U.S.–India trade talks.
