The day of 31 July 2025 came as a black day for Indian investors. The Indian stock market benchmark index BSE Sensex and NIFTY50 declined drastically. As soon as the market opened, the selling pressure was so much that in just a few minutes, Rs 5.5 lakh crore of investors drowned.
By 9:20 am, BSE Sensex fell 604 points i.e. 0.74% to 81,668.
NIFTY50 was lost 183 points i.e. 0.73% to 24,668 levels.
Due to this decline, the market capitalization of BSE listed companies decreased from ₹ 458.85 lakh crore to ₹ 453.35 lakh crore.
The major reasons behind the fall
1) 25% tariff threats of Donald Trump
Former US President Donald Trump announced that 25% tariff would be imposed on goods imported from India from August 1. Apart from this, he also warned to impose a penalty on India.
This news had come before the market opened, due to which investors started selling and selling.
According to analysts, if this tariff is applied, Indian exporters will have a direct impact.
Which sectors are affected?
Textile: There are huge amounts of textile and apparel exports to the US from India. This business will become expensive due to tariff.
Pharma: Indian generic medicines play an important role in the US health sector. Tariffs can increase their cost.
Auto Componants: America imports a large amount of auto parts from India. This industry will also be affected by tariffs.
Trump also indicated that he is dissatisfied with the growing role in India’s BRICS group and deteriorating the US-India trade balance.
2) Uncertainty on the interest rates of US Federal Reserve
The second major reason was the recent statement of the American Federal Reserve. Fed kept the interest rates unchanged for the fifth consecutive time, but did not give any clear indication about the possible rate cut in September.
Fed Chairman Jerome Powell said that “It is too early to tell whether the rates will decrease or not.”
Indian investors hoped that the US would cut rates, leading to foreign investment in emerging markets.
3) Impact of decline in global market
Asian markets also saw weakness. Hangseng index of Hong Kong and Nikkei index of Japan open in red mark.
American stock futures were also under pressure, making investors profit booking to avoid the risk.
Which sectors were the most affected?
Auto Sector (Auto Sector)
Nifty Auto Index saw a decline of 1%.
Investors believe that tariffs on auto components will damage exports, which will affect the profits of companies.
Banking and Finance
Metal
Pharma (Pharma)
Impact on investors: loss of Rs 5.5 lakh crore
The decline of the Indian stock market made a major impact on investors’ assets.
There was a loss of ₹ 20,000 crore on Monday itself.
₹ 6,550 crore drowned in just 15 minutes on Tuesday morning.
In total, the loss of investors in two days reached ₹ 5.5 lakh crore.
Opinion of experts
1) Should investors panic?
Analysts of Brokerage House Motilal Oswal Financial Services say:
“The decline in the market is short-term. There is no clarity about the tariff. As soon as the government takes any concrete steps, the situation may be normal.”
2) Is this the beginning of a long recession?
According to experts, it is too early to say that this is the beginning of the long-term bear market.
Fundamentals of Indian economy are strong.
The government is emphasizing on infrastructure and manufacturing.
What strategy should be there for investors?
1) Diversification
2) Investment in strong stocks
Market experts say there is a chance to invest in the fall, but only invest in bluechip stocks.
3) Avoid short -term risk
If investors are in the stock market for short -term profits, they are currently being advised to take precautions.
Government of India response
The government has taken this situation seriously. Officials of the Ministry of Commerce said:
“We are dialogue with America. We believe that the tariff will not be in anyone’s interest.”
The Prime Minister’s Office (PMO) also issued a statement that all possible steps would be taken to protect the interests of Indian exporters. On 31 July 2025, the heavy decline in the Indian stock market shook investors. Trump’s tariff threats, uncertainty over the rate cut of American Fed and weakness of the global market together created this pressure. However, experts say that this decline is temporary and as soon as the situation is clear, stability will return to the market.
