Sensex, Nifty Rebound After Two-Day Bloodbath Amid US Tariff Jitters

Indian stock markets opened with a sense of relief on Friday, staging a modest comeback after two consecutive sessions of heavy selling triggered by the implementation of steep US tariffs. The benchmark S&P BSE Sensex rose 112 points to 80,193.25 in early trade, while the NSE Nifty50 gained 45 points to trade above the 24,545 mark, as investors cautiously bought the dip.

The mild recovery follows a brutal two-day sell-off that saw the Sensex plunge by a staggering 1,500 points. The market rout was primarily driven by investor panic over President Donald Trump’s decision to impose a 50% tariff on a wide range of Indian goods, a punitive measure linked to India’s continued purchase of discounted Russian oil.

The negative sentiment has been reflected in foreign investor activity, with FIIs offloading $3.3 billion worth of Indian shares in August, the largest monthly outflow since February. This selling pressure has dragged the Sensex down by 1.4% for the month so far.

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the negative sentiment from the “Trump tariff” and high valuations in the Indian market has encouraged foreign institutions to build short positions. He noted that while strong buying from domestic institutional investors (DIIs) has provided some cushion, it has not been enough to halt the slide entirely.

However, Dr. Vijayakumar suggested that the current dip could present an opportunity for long-term investors. He believes that a quick resolution on the tariff front could trigger a sharp reversal and short covering. “Longer term, India’s policy measures—fiscal stimulus through the Budget, monetary easing, and the upcoming GST rationalisation—should support growth and earnings, paving the way for a fundamentally backed rally,” he said, advising investors to “use dips to accumulate fairly valued stocks.”