- By Shreyansh Mangla
- Tue, 26 Aug 2025 11:17 AM (IST)
- Source:JND
Sensex, Nifty Crash: On Tuesday, August 26, the stock market's morning trade began on a dismal note, with strong losses experienced across different market segments. In a rare occurrence, both the Sensex and Nifty lost 1 percent of their value. The primary reason for this drop, as expressed by investors, is the looming threat of Trump's tariffs on Indian exports. Sensex opened at 81,377.39 crashing nearly 700 points, or 1 per cent, to the low of 80,947.26 while intraday trading. While the Nifty 50 opened at 24,899.50 but dropped by almost 1 per cent, 143 points, to its day's low of 24,755.60.
Investors are on a selling spree due to uncertainty about any truce between India and the US on trade tariffs, as the tariffs are set to take effect from tomorrow, August 27, 2025.
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The wealth of investors has collectively degraded by a huge amount, as BSE-listed firms lost Rs 5 lakh crore in just one trading day.
What has caused such a sudden drop in Sensex scores?
Here are the major factors that are immediately affecting the market capitalisation of major firms on BSE:
Trump Tariffs Destroy Indian Exports With 50 Percent Tariffs
Earlier, investors were hoping that these tariffs were a temporary phase that would pass soon. But given the latest reports, the US will now impose a 50 per cent tariff on all Indian exports to the US, making them much more expensive and less attractive for customers in the US. As the August 27, 2025, deadline approaches, the Trump administration, even after announcing tariffs on major exporting countries like India, released yet another draft notice on August 25. This notice stated that the Trump administration is planning to impose another 50 per cent tax on Indian products, effective from August 27, 2025. This has made major exporters in India anxious as the deadline approaches near.
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Many experts believed that the recent meeting between Vladimir Putin and Trump could bring some relief from tariffs. Some even hoped for a complete withdrawal of tariffs, but all hopes were dashed as a notification from the US administration indicated its adamant stance on tariff imposition. As of now, there are no reports of any possible future meeting between the leaders of India and the US, which has made the situation look even more dismal to investors.
Last week's market rally and false hope
The Indian stock market rallied last week due to upcoming GST reforms and a credit rating upgrade. But due to this sudden optimism, profit booking emerged amid FII selling and global uncertainty. As a result, many investors went on a selling spree to lock in their profits, eventually pulling down Indian stock market prices.
FII Sell-Off
The FIIs have been on a selling spree lately with a significant sell-off of over Rs 31,889 crore in the first half of the month, primarily impacting financials and IT. As net sellers in the market, their sustained outflows have put downward pressure on stock prices and market liquidity.
Global markets decline
The weakness in US equities has also severely affected Asian markets, such as India. It is attributed to the latest changes in US Fed policies, which have affected the S&P, declining 500 points (0.43 percent), the Dow Jones Industrial Average, which is down by 0.77 percent, and the NASDAQ Composite, which is down by 0.22 percent, on August 25th.
Dollar under pressure
US President Donald Trump, in addition to tariffs, has also created a political ruckus by suddenly replacing US Fed governor, Lisa Cook, with allegations regarding mortgage funds. This has contributed to the drop in the Indian rupee and compounded the selling pressure on the Indian stock market. Thus, import costs have risen sharply, squeezing corporate margins and adding to the negative sentiment of an already tariff-plagued Indian stock market.