Indian Markets Fall 0.9% This Week on US Tariff Worries, FII Outflows

The Sensex fell 0.9% this week, with the Nifty following suit, finishing below the significant 24,400 level at 24,363.

Equities maintained their phase of consolidation for yet another week, a pattern since the beginning of July, as investor mood was subdued due to fears of high global interest rates, poor international leads, and consistent profit-booking by heavyweights, said analysts on Saturday.

The Reserve Bank of India Monetary Policy Committee (MPC) reduced its inflation forecast for FY26 to 3.1% from 3.7% based on a good monsoon and better supply conditions. The repo rate remained unchanged at 5.5% with a neutral policy stance and GDP growth projections for FY26 were kept unchanged at 6.5%.

Adding to the market wariness, the US this week imposed a 25% tariff on Indian exports. But RBI Governor Shaktikanta Das said it would have negligible impact on India's economy.

Concerns over steep US tariff rates and underwhelming quarterly earnings have dampened market confidence. Persistent selling by FIIs, particularly in pharma stocks with significant US exposure, underscores this cautious outlook. The continued depreciation of the Indian rupee has also added to investor anxiety," said Vinod Nair, Head of Research at Geojit Financial Services.

Still, the downside was partly cushioned by the RBI’s reaffirmation of macroeconomic stability, optimism about domestic growth, and early signs of cooling inflation. Nair added that market volatility is likely to continue, with investors closely tracking upcoming inflation data from both India and the US.

Technically, Mandar Bhojane of Choice Equity Broking pointed out that the Nifty has recorded six consecutive red candles on its weekly chart — a rare sight that indicates consistent selling pressure. "Any kind of reversal around the 24,200–24,000 support level could provide a buying opportunity," he added, going on to say that a firm close above 24,590 would set the stage for 25,000 and 25,250 in the near term.