SENSEX plunges over 650 points, NIFTY50 below 24,800; here are key factors behind the fall

Stock market today: The Indian equity benchmarks staged a gap-down opening on Tuesday, August 26, on the back of broad-based selling pressure after the United States notified of an additional tariff of 25% on Indian merchandise. The SENSEX fell as much as 689 points, and the NIFTY50 index dropped below its important psychological level of 24,800.

Higher trade tariffs

The sharp fall came after the US Administration notified that an additional 25% tariff on Indian imports will be imposed on August 27. The duties will take effect from 12:01 am Eastern Daylight Time (EDT).

According to the Department of Homeland Security, a specified rate of duty on imports of articles that are products of India will be imposed.

"The duties set out in the Annex to this document are effective with respect to products of India that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 AM Eastern Daylight Time, on August 27, 2025," the notification stated.

Analysts were expecting that Indian and US authorities would reach out for agreement on lower tariffs, but that did not fructify, leading to a sharp fall.

Weak Asian markets

Asian shares fell across the board Tuesday, taking their cue from a broad decline on Wall Street that reversed some of the big gains notched last week on hopes for interest rate cuts from the Federal Reserve.

Japan's benchmark Nikkei 225 dove 1.1% in morning trading to 42,342.28. Australia's S&P/ASX 200 declined 0.3% to 8,949.40.

South Korea's Kospi lost 0.8% to 3,184.70 after data showed improved consumer sentiment, strengthening expectations that the central bank won't move on interest rates. Hong Kong's Hang Seng shed 0.2% to 25,766.68, while the Shanghai Composite slipped 0.1% to 3,878.24.

On Wall Street, the S&P 500 fell 0.4% Monday but remains near its all-time high. The Dow Jones Industrial Average closed 0.8% lower after setting a record high on Friday. The Nasdaq Composite closed 0.2% lower.

Heavyweights drag

Selling pressure was so intense that 28 out of 30 shares in the SENSEX were trading lower, and 45 out of 50 shares in the NIFTY50 index were trading in the red.

HDFC Bank, ICICI Bank, Bharti Airtel, Reliance Industries, Sun Pharma and Larsen & Toubro were among the top drags on the SENSEX as they collectively wiped out over 350 points from the SENSEX.

Sun Pharma was the top loser in the NIFTY50 index; the stock fell 2.53% to ₹1,614. Adani Enterprises, Dr Reddy's Labs, Tata Steel, Power Grid, Shriram Finance, Adani Ports and Hindalco also fell between 1.2% and 1.8%.

On the flip side, Nestle India, Hindustan Unilever, Eicher Motors, Eternal and ITC were among the notable gainers in the NIFTY50 index.

Sectoral watch

Selling pressure was broad-based, as all the 15 major sector gauges compiled by the National Stock Exchange were trading lower, led by the NIFTY Pharma index's 1.5% fall. NIFTY Realty, Healthcare, Metal, Auto, Bank and Financial Services indices also fell between 0.8 and 1.55%.

Mid- and small-cap shares were also facing selling pressure as the NIFTY Midcap 100 index dropped 1.09% and the NIFTY Smallcap 100 index plunged 1.29%.

The measure of volatility, meanwhile, spiked by 4.72% to 12.31.

The overall market breadth was extremely negative, as 2,363 shares were declining while 850 were advancing on the BSE.