.jpeg)
Indian benchmark indices Sensex and Nifty ended lower on Friday, halting a six-day winning run, as investors turned cautious ahead of Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole symposium and braced for fresh U.S. tariffs on Indian goods, amid other headwinds weighing on sentiment.
The BSE Sensex fell 693.86 points, or 0.85%, to close at 81,306.85, while the NSE Nifty shed 213.65 points, or 0.85%, to close at 24,870.10.
The benchmarks had rallied more than 2% over the past six sessions on optimism over Goods and Services Tax reforms and an S&P sovereign rating upgrade.
Here are the five key factors behind today’s decline:
1. Caution ahead of Jackson Hole
Investors largely kept to the sidelines ahead of Federal Reserve Chair Jerome Powell's speech at the Fed’s annual Jackson Hole gathering. Markets are seeking clarity on whether the U.S. central bank will trim rates by 25 basis points in September as widely expected. Bets on a cut have moderated after minutes from the Fed’s July meeting showed divisions among policymakers."Investor sentiment turned cautious ahead of the U.S. Fed Chair’s speech at the Jackson Hole symposium, which is expected to provide critical insights into the global liquidity outlook and future interest rate trajectory," said Vinod Nair, Head of Research at Geojit Investments.
Lower U.S. rates typically enhance the appeal of emerging markets such as India, but uncertainty has weighed on sentiment.
IT stocks, which had gained 3% in the last three sessions, ended 0.8% lower on Friday.
2. U.S. tariff concerns
U.S. President Donald Trump earlier this month announced an additional 25% tariff on Indian goods, effective August 27. The duties, which could lift levies on some exports to as high as 50%, mark some of the steepest applied to any U.S. trading partner.
The U.S. using trade tariffs on India as a strategic tool in its stance against Russia has raised near-term concerns among institutional investors, said Vinod Nair, Head of Research at Geojit Investments.
Dr V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments warned that if the tariff kicks in as expected, the impact on India’s growth will exceed the 20–30 basis points currently estimated.
3. Profit taking after 6-day rally
After a six-day surge, investors booked profits, particularly in financials and IT sectors, with the indices falling 1% and 0.8%, respectively and dragging major sectoral indices lower.
The Nifty and Sensex had gained 2.4% and 2.2%, respectively, during the six-day winning run, driven by optimism over a consumption boost from Goods and Services Tax revisions and an S&P sovereign rating upgrade.
On the day, HDFC Bank and ICICI Bank were among the key laggards, falling 1.3% and 0.7%, respectively. Pharma and consumer durables were the only sectors to buck the trend.
4. FII selling pressure
Foreign institutional investors continued to trim holdings, offloading Rs 31,889 crore in eight sectors during the first half of August, led by financials and IT. In total, FIIs have sold Rs 20,976 crore worth of equities in the period, extending July’s withdrawals and bringing this year’s net outflows to about Rs 1.2 lakh crore.
Jefferies noted on August 13 that foreign portfolio investor positioning in India is at “decadal lows.” While robust domestic inflows offer some downside protection, the brokerage cautioned that rebounds “may not sustain for long.”
5. Technicals signal insufficient momentum
The Nifty paused on Friday after a steady run-up, suggesting a brief consolidation before the next leg higher, said Rupak De, Senior Technical Analyst at LKP Securities, adding that the index continues to hold above the 50 EMA, reinforcing the short-term uptrend.
"On the downside, support lies at 24,800; staying above this level keeps the trend intact with scope for an advance towards 25,000–25,250," said De.
The Nifty’s rally lost steam near 25,153, “within touching distance” of Geojit’s near-term objectives, said Anand James, the firm’s Chief Market Strategist. James said indicators show insufficient momentum to push higher, though he does not expect a collapse.
