Indian equity markets ended the week under heavy pressure on Friday, with benchmark indexes logging their fifth consecutive session of losses and posting their sharpest weekly decline in more than three months.
Renewed fears over U.S. trade policy, particularly the risk of punitive tariffs tied to Russia-related transactions, unsettled investors and triggered broad-based selling across sectors.
The Nifty 50 fell 0.75% to close at 25,683.3, while the Sensex slid 0.72% to 83,576.24. Both benchmarks shed roughly 2.5% over the week, erasing gains built earlier in the quarter and underscoring a sharp deterioration in risk appetite.
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Market breadth was decisively negative. Fifteen of the 16 major sectoral indexes declined during the week, signaling that the sell-off was not confined to a single pocket of the market. Mid-cap and small-cap stocks, which had been market leaders for much of the year, bore the brunt of the retreat. The Nifty Midcap 100 dropped 2.6% for the week, while the Smallcap 100 lost 3.1%, reflecting investors’ preference for safety amid rising global uncertainty.
The immediate trigger for the sell-off was renewed concern over U.S. tariffs after President Donald Trump backed a bipartisan bill that could impose tariffs of up to 500% on countries doing business with Russia, according to Republican Senator Lindsey Graham. The proposal has heightened anxiety in India, which has emerged as the world’s second-largest buyer of Russian crude after China since the start of the Ukraine war.
Market participants fear that even the threat of such measures could complicate India’s trade relations, disrupt energy supply chains, and weigh on capital flows.
“If such extreme tariffs are enacted, the immediate effect would be volatility in sectors linked to U.S. trade, pressure on export competitiveness, and renewed caution in foreign investor flows,” said Amit Jain, co-founder of Ashika Global Family Office Services.
He added that the prospect of sweeping tariffs would force investors to reprice risk across equities, currencies, and commodities.
Adding to the unease, the U.S. Supreme Court is expected to rule on the legality of Trump’s tariff actions later in the day, a decision that could have far-reaching implications for global trade dynamics and emerging markets.
Energy, banks drag the market lower
Oil and gas stocks led the decline among major sectors, reflecting their direct exposure to global trade and energy policy risks. Reliance Industries, India’s most valuable company by market capitalization, fell 7.4% over the week, marking its steepest weekly drop since October 2024. The slide followed the company’s disclosure that it does not expect any Russian crude oil deliveries in January, citing heightened uncertainty around tariffs.
The weakness in Reliance alone had an outsized impact on the benchmarks, given its heavy weight on both the Nifty and Sensex.
Banking stocks also came under pressure, amplifying the market’s losses. HDFC Bank, the country’s largest private-sector lender and the single biggest constituent of the Nifty, dropped 6.3% for the week — its worst performance in nearly two years. Investors reacted negatively to the bank’s quarterly business update, which raised concerns about slowing deposit growth at a time when competition for deposits remains intense.
The decline in HDFC Bank dragged the Nifty Bank index down 1.5% for the week, weighing on broader sentiment toward financial stocks that have been central to the market’s rally in recent years.
Within the consumer space, performance was mixed, highlighting how company-specific fundamentals continue to matter even in a risk-off environment. Clothing retailer Trent slumped 9.9% over the week as softness in revenue growth persisted into the December quarter, reinforcing worries about discretionary spending amid high inflation and uneven demand.
In contrast, jeweler Titan gained 3.7% for the week, buoyed by strong sales growth that signaled resilient demand for jewelry, even as broader consumption trends remain uneven.
Stock-specific shocks add to volatility
Beyond macro and sectoral pressures, stock-specific developments also contributed to intraday volatility. Manappuram Finance plunged 7.6% on Friday after Reuters reported that the Reserve Bank of India raised objections to Bain Capital’s plan to acquire a controlling stake in the gold loan provider. The report reignited concerns over regulatory scrutiny in the non-banking financial sector and rattled investor confidence in similar deals.
Looking ahead, investors are bracing for further volatility, with global cues firmly in focus. U.S. jobs data due later on Friday is expected to influence expectations around the Federal Reserve’s next policy moves, which in turn could shape capital flows into emerging markets such as India.
Analysts say sentiment is likely to remain cautious for now, as markets weigh the risk of an escalation in U.S. trade actions against Russia-linked economies, the durability of global growth, and the outlook for foreign investor participation in Indian equities.