Indian stocks may face yet another volatile week as Trump tariff concerns loom

Indian equity markets are set for a choppy week ahead as investors brace for any new development on escalating trade tensions with the United States, besides the release of key domestic inflation data for July. The cautious sentiment follows a sixth straight week of declines for benchmark indices, with both the Sensex and Nifty ending lower on persistent selling pressure and profit booking, analysts said.

During the week ended Friday, the BSE Sensex dropped 1.01 per cent to close at 79,857.79, while the NSE Nifty shed 1.20 per cent to settle at 24,363.30.

Market mood turned negative after the US President Donald Trump announced a total 50 per cent tariff on Indian goods, a move that unsettled investors and particularly export-focused sectors.

"The dominant driver of the week's decline was the sudden escalation in US tariffs," said Ajit Mishra, Senior Vice President - Research at Religare Broking Ltd. "Near-term market direction will be shaped by clarity on US tariff implementation, India's diplomatic response, and incoming inflation readings."

Foreign institutional investors (FIIs) were net sellers during the week, with the most pronounced selling seen in pharma and IT stocks that have large US market exposure, Mishra said.

"The Indian equity market exhibited downward movement, closing at a three-month low amid growing concerns over the impact of U.S. tariffs on Indian exports," noted Vinod Nair, Head of Research at Geojit Financial Services.

The Reserve Bank of India's decision to keep the policy repo rate unchanged at 5.50% with a neutral stance did little to improve sentiment.

In the coming week, investors will focus on India's Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation data. Global developments, especially in US-India trade talks, will also be closely monitored.

The earnings season is drawing to a close, but key results from Ashok Leyland, ONGC, IOC, Hindalco Industries, and BPCL are expected to trigger stock-specific moves.

Siddhartha Khemka, Head of Research - Wealth Management at Motilal Oswal Financial Services, said, "Overall, we expect equities to remain in consolidation mode until there is clarity on the tariff front. In this volatile environment, investors may focus on domestic-oriented themes, while traders are advised to keep positions light."