Benchmark indices Nifty and Sensex tumbled sharply on July 31 as investor sentiment took a hit following U.S. President Donald Trump’s unexpected move to slap a 25 percent tariff—along with additional penalties—on Indian exports. While markets had braced for a possible tariff, the severity of the action caught traders off guard, triggering a wave of selling across sectors.

At about 9:20 am, the Sensex was down 468.95 points or 0.58 percent at 81,012.91, and the Nifty was down 140.85 points or 0.57 percent at 24,714.20. About 651 shares advanced, 2013 shares declined, and 108 shares were unchanged.

"The 25 percent tariff rate is certainly a negative development as it compares to a lower rate for peers such as Vietnam, Indonesia and the Philippines, which compete with India in a similar category of labour-intensive products and electronic goods," says Garima Kapoor, Economist and Executive Vice President, Elara Capital. "The exact details of the tariffs on the exempted items, such as pharma and the ones that were charged at a differential rate such as iron, steel and auto is unknown as of now, but inclusion of pharma into tariffs should be incremental negative for India’s exports as US accounts for more than 30 percent of India’s pharma exports. If no deal is signed by September-October, we see a downside to the full-year GDP growth estimate for India by 20 bps," she added.

At the open on July 31, market sentiment appeared cautious with most sectoral indices trading in the red. The Nifty Auto index led the losses, falling 1.16 percent, followed by declines in Nifty Consumer Durables (1.15 percent), Oil & Gas (1.65 percent), and Midcap 100 (0.93 percent). Banking stocks were under pressure as well, with Nifty Bank and PSU Bank down 0.59 percent and 0.78 percent, respectively. The Nifty IT and Metal indices also saw mild declines. On the volatility front, India VIX spiked 7.76 percent to 12.08, indicating a pick-up in market nervousness.

Shares of Mahindra & Mahindra (M&M) fell over a percent despite the company posting a strong set of numbers for the June quarter and issuing an upbeat outlook for the months ahead. The automaker reported a 32 percent year-on-year rise in net profit to Rs 3,450 crore for the quarter ended June 30, 2025, driven by healthy demand for its high-margin SUVs and tractors. Revenue from operations grew 26 percent to Rs 34,143 crore, up from Rs 27,133 crore in the same period last year.

Jio Financial Services Ltd (JFSL) shares gained almost a percent despite the weak market mood after the company unveiled plans to raise as much as Rs 15,825 crore through a preferential issue of warrants. The company’s board has cleared the proposal to issue 50 crore warrants at Rs 316.50 apiece—each warrant carrying a face value of Rs 10 and a premium of Rs 306.50.

Technical View

Market sentiment remains cautiously optimistic amid heightened volatility and mixed global cues. "On the technical front, the Nifty formed a bullish hammer candlestick and closed above the previous day’s high, signaling the potential for a follow-up rally. The index is currently trading above its 100-day EMA, reflecting underlying strength. A close above the 50-day EMA at 24,935 would further confirm a bullish reversal. If this level is sustained, the index could advance toward 25,200 and eventually 25,800 in the coming sessions. On the downside, support is placed in the 24,590–24,400 zone, which could act as a potential area for dip-buying," Hardik Matalia of Choice Equity Broking said.

Jio Financial Services and Tata Steel were the only gainers on the Nifty. Laggards on the index included Tata Motors, Dr Reddy's, Reliance Industries, Titan Company, and Bharti Airtel.