The Indian stock market is bracing for extreme volatility amid escalating global tensions and market shocks from both the United States and China, raising concerns that Monday could see a significant plunge or at least “deep red” on Dalal Street.
This comes on the back of the sharp global meltdown over the past week, as US President Donald Trump’s surprise announcement of new 100% tariffs on Chinese imports and China’s swift retaliatory moves triggered a wave of risk aversion.
Major international indices, Japan’s Nikkei, Hong Kong’s Hang Seng, and China’s CSI 300, plunged between 7-13% in a single trading session, dragging sentiment across all emerging markets.
Global contagion hits India
Indian benchmarks have historically mirrored global sell-offs, especially when foreign portfolio investors (FPIs) hit the exit button. Data shows FPIs have already pulled out USD 13-15 billion from Indian equities since August, in part due to the rupee breaching Rs 88/USD and US policy shocks.
In recent weeks, Nifty and Sensex slipped sharply, breaking through critical technical supports, with the Sensex shedding several hundred points and Nifty falling below the 25,100 zone on headline days.
Broader market sentiment has soured as earnings slow, valuations remain stretched, and FIIs rotate money out of India in search of “safer waters” following the American tariff shock and ensuing Chinese retaliation.
Sectoral impact and leading risks
Experts highlight that IT, pharma, banking, and metal stocks could remain under the most pressure owing to their global exposure. The US and China collectively account for nearly half of India’s external trade, and any policy tremor there causes ripple effects at home.
For example, the automobile sector is already witnessing margin pressures from the semiconductor shortage linked to China’s supply chain disruptions, a situation worsened by current trade tensions.
What market experts are saying
Top analysts remain divided, but most recommend caution in the very near term. Nifty’s technical charts show the index oscillating between 25,000 and 25,350, with the threat of a sharper correction if support at 25,000 is breached.
Manoj Kumar, a technical strategist, warns that any convincing break below 24,867 could “amplify the downside and lead to panic selling,” but notes there’s also strong support which could prompt a relief rally if global cues stabilise.
Deepak Shenoy, founder of Capitalmind, told business channels, “Markets may open with a gap-down, but India’s underlying growth story and domestic inflows could limit the damage unless foreign selling accelerates further.”
Other experts urge traders to “hedge or exit aggressive long positions” and avoid “trying to catch the falling knife” until a clear reversal materializes. The consensus is to “preserve cash and wait for two to three quarters of improving earnings and global calm before heavy buying.”