Small-Cap Selloff Deepens Amid Tariff Tensions and Market Volatility
The Indian equity market closed the week on a cautious note as persistent US tariff concerns and sustained foreign investor selling dragged indices lower. The BSE Small-cap index slipped nearly 2%, with more than 40 counters recording double-digit declines ranging from 10% to 24%.
Heavy losses were seen in PG Electroplast, Kitex Garments, Unichem Laboratories, Morepen Laboratories, Advait Energy Transitions, KR Rail Engineering, Faze Three, and Advanced Enzyme Technologies. The selloff marked the third straight week of weakness in broader markets, underlining the fragility of investor confidence.
Broader Indices Remain Under Pressure
For the week, the BSE Sensex dropped 742.12 points or 0.92% to settle at 79,857.79, while the Nifty50 fell 202.05 points or 0.82% to close at 24,363.30. Large-cap and mid-cap indices each shed about 1%, trailing their small-cap counterparts’ sharper declines.
Sectoral performance was mixed, with Nifty Pharma, Realty, FMCG, and Healthcare losing around 2% each. In contrast, PSU Bank, media, and metal stocks managed modest gains of 0.5% to 1.5%.
FII Selling Continues, DIIs Offer Support
Foreign Institutional Investors extended their selling streak into a sixth consecutive week, offloading equities worth ₹10,652.47 crore during the week. So far in August, FIIs have sold shares worth ₹14,018.87 crore.
On the other side, Domestic Institutional Investors remained steady buyers for the 16th straight week, purchasing equities worth ₹33,608.66 crore during the week and ₹36,795.52 crore so far this month. This consistent domestic inflow provided some cushion against steeper market losses.
Global Trade Tensions Cloud Outlook
Vinod Nair, Head of Research at Geojit Financial Services, noted that the market’s consolidation since July reflects the drag from trade-related challenges and underwhelming earnings. “Persistent FII selling, particularly in pharma stocks with significant US exposure, highlights the cautious sentiment. The rupee’s depreciation has also added to the pressure,” he said.
Nair added that optimism from the RBI’s reaffirmation of macroeconomic stability and easing inflation trends has softened the downside, but risks from global trade frictions and sustained foreign outflows remain elevated.
Winners Amid the Weakness
While the broader tone was negative, a handful of stocks bucked the trend. Sarda Energy and Minerals, Timex Group India, Sanghvi Movers, Zinka Logistics Solutions, Centum Electronics, KRBL, Baazar Style Retail, Godfrey Phillips India, and Entertainment Network India posted gains of 12% to 21%, reflecting selective buying in niche segments.
Looking Ahead
The market’s near-term direction will hinge on upcoming inflation data from India and the US, alongside any fresh developments in global trade relations. Analysts suggest investors focus on domestic consumption-driven sectors, which may be better equipped to ride out short-term volatility.
