Key Points

Benchmark indices Nifty and Sensex ended the week with a loss of over 2.2 per cent. Profit-booking was evident in metals, IT, realty, and auto, which shed between 0.5 per cent and 1.5 per cent.

In contrast, Capital Goods, Consumer Durables, Media, and FMCG, posted gains between 0.4 per cent and 1 per cent. Broader markets underperformed, with the Nifty Midcap 100 and Nifty Small cap 100 indices declining by 0.57 per cent and 0.39 per cent, respectively.

Markets opened positively this week, driven by a proposed GST rationalisation, a favourable monsoon outlook, and global factors like easing US bond yields and potential Fed rate cuts in September.

However, caution set in ahead of the US penalty tariff deadline, sparking broad-based selling which led to three consecutive sessions in red zone. Analysts said that subsequent imposition of tariffs on Indian goods further dented confidence, driving profit booking across sectors.

"Large caps declined, while mid- and small caps saw sharper losses on stretched valuations and heightened uncertainty," said Vinod Nair, Head of Research, Geojit Investments Limited.

Looking ahead, India's strong Q1 GDP print driven by government spending and policy measures, may provide a buffer against external headwinds, though fiscal concerns remain. A resolution of tariff disputes may boost market sentiment, but the reciprocal 25 per cent tariff is likely to stay in effect in the near to medium term, he added.

Sectors likely to be affected include textiles, equipment manufacturers, metals, auto, and seafood. IT and Pharma may experience sentiment pressure, although they are not directly impacted by the tariffs.

India's economy shattered expectations in the April-June 2025 quarter, racing ahead with a remarkable 7.8 per cent real GDP growth.

"Investors should keep a close watch on upcoming domestic and US macro data, including PMI prints, jobless claims, payrolls, and unemployment figures, for further insights," Nair added.

"Nifty has an immediate support base placed at 24,400-24,350 levels, being the confluence of the recent lows and the key retracement area. Index holding above this level will lead to a consolidation in the range of 24,400-24,900," Bajaj Broking research said in a release.

Markets are epected to show a mixed trend in near term. Analysts said that sectors focused on consumption and domestic growth, including FMCG, Durables, Discretionary, Cement, and Infrastructure, are likely to benefit from GST cuts, strong demand, and increased government spending.

- IANS