On August 5, 2025, the Indian stock markets witnessed a session marked by caution, volatility, and global-overhang-driven weakness. After a positive start signalled by Gift Nifty, investor sentiment quickly turned fragile as news of renewed trade tensions, particularly, US President Donald Trump’s statement on substantially raising tariffs on Indian goods over Russian oil purchases, cast a cloud over equities. The Nifty 50 fell below the 24,700 level, closing at 24,649.55 with a loss of 73 points, while the Sensex declined 308 points to end at 80,710.25.
Large Cap laggards
The downturn was broad-based. Technology, healthcare, and financial services stocks dragged indices lower, with notable pressure on large-caps such as Reliance Industries, Infosys, Adani Ports, and ICICI Bank. Market breadth in the broader indices was negative again, with the Nifty Midcap and Smallcap indices also finishing in the red, though the Nifty Smallcap recovered from its intraday lows. Most sectoral indices ended negative, Nifty Oil and Gas and Nifty IT performed poorly. In contrast, auto and metal sectors were the bright spots, bucking the general market trend for the second consecutive session, thanks to favorable earnings and demand trends.
Banking sector displayed mix
Banking stocks had a mixed showing. IndusInd Bank outperformed, surging 5% after announcing a new CEO and MD, defying sector headwinds. However, Nifty Bank fell nearly 260 points (0.47%) as traders exercised caution ahead of the ongoing RBI Monetary Policy Committee meeting, which will announce its outcome tomorrow. The rupee extended its recent slide, closing at its lowest in six months against the US dollar, reflecting concern about trade headwinds and capital outflows.
Q1 Results’ factor
Earnings from heavyweights such as Adani Ports, Bharti Airtel, Berger Paints, Lupin, and Exide Industries were keenly watched. The mixed corporate earnings, with some stocks reacting negatively to their Q1 results, contributed further to intra-day volatility. Notably, DLF and Aurobindo Pharma traded in the red post-results. Among mid- and small-cap stocks, there were isolated outperformers, with pockets of buying in select auto, metals, and PSU bank names.
FII selling continues
Foreign portfolio investors continued to be net sellers for the 11th session, reflecting persistent global risk aversion. In contrast, domestic institutional investors extended their buying streak, helping temper some of the downside. Volumes were elevated due to the first weekly expiry for the August series contracts, which added to market swings.
In summary, today’s market movement reflected a convergence of external headwinds, cautious sentiment around RBI’s policy meet, and sector-specific earnings reactions. While geopolitical risks weighed, resilient demand in select sectors and sustained DII flows offered some cushion against a larger sell-off. Markets are now poised for direction from the central bank and further cues on the US-India trade front.
