The new week is set to begin on a cautious note for domestic markets amid escalating tension between India and the US over tariffs. All eyes are on Russian President Vladmir Putin’s meeting with the US President Donald Trump on Friday. Any positive outcome from the meeting will trigger a relief rally for domestic markets, say market experts. Risk-off trading will continue till some clarity emerges on the tariff front, said analysts.
Puneet Singhania, Director at Master Trust Group, said the Indian stock market is expected to remain cautious, with the recently imposed 50 per cent U. tariff on Indian exports keeping pressure on export-linked sectors. “While the tariff may not significantly impact India’s broader economic growth, investor sentiment could remain fragile in the near term, especially amid concerns over the possibility of further US trade restrictions,” he said adding that volatility could elevate as markets digest these trade headwinds alongside Q1 earnings.
According to him, persistent foreign institutional investor (FII) selling, driven by near-term uncertainty, may add to downside risks, though select sectors could still provide opportunities.
FIIs followed up with their sell strategy in July, selling stocks worth ₹14,019 crore till August 8. A significant feature of institutional activity is the strong and sustained buying by the DIIs, who have bought equity for ₹36,793 crores in August
Gift Nifty at 24,390 indicates that Nifty may lose about 50-60 points at open.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd said, Despite the sustained buying by the DIIs, the market has been drifting down during the last six weeks. “The market turned weak technically as well as fundamentally. Continuous lower lows in the benchmark index is a strong indicator of technical weakness. Nifty recording continuous lower lows led to accumulation of short positions in the market. This explains the weakness in the market, despite strong and sustained buying by the DIIs. Fundamentally, there are no triggers for a rally in the market. Q1 earnings indicate a modest earnings growth of only around 10 per cent for FY26.”
He added: “Market sentiments have been impacted by President Trump’s decision to impose 50 per cent tariff (including the 25 per cent penal tariff for importing energy from Russia) on India. President Trump’s decision to impose the highest tax of 50 per cent on “friendly” India came as a shock to the market and this has impacted market sentiment negatively. FII investment, going forward, will be decided by the developments on the tariff front.”
DIIs remain resilient
Meanwhile, domestic brokerage Motilal Oswal Financial, in a study said Domestic Institutional Investors (DIIs) invested $19.7 billion in Indian equities, lifting their Nifty-500 ownership to an all-time high of 19.4 per cent (+170bp YoY). This is the fifth consecutive quarterly rise, surpassing FII ownership (18.8 per cent).
Foreign Institutional Investors (FIIs) added $5.4 billion, with BFSI allocation climbing to a seven-quarter high of 34.9 per cent (+350bp YoY). Promoter holdings dipped to a historic low of 49.3 per cent, driven by primary market buoyancy and stake dilution.
Retail ownership remained stable at 12.4 per cent, supported by record monthly SIP flows exceeding $3 billion.
Published on August 11, 2025
