Indian Market’s Wild Ride on Aug 7, 2025

🧭 Short Introduction

On August 7, 2025, Indian markets initially slipped sharply as Sensex fell nearly 700 points (from around 80,600 to about 79,811) and Nifty dipped to around 24,344. In a dramatic daily turnaround, late-fifth-hour buying during weekly derivatives expiry reversed the slide — bringing Nifty back up by ~252 points to close near 24,596, and Sensex recovered ~812 points, ending the session higher. In this blog, we dissect exactly what triggered the morning meltdown and what fueled the surprising rebound.

🔍 Summary of Key Movements

Index	Intraday Low	Recovery	Closing Value
Nifty	~ ₹24,344	+~252 pts	₹24,596.15 (+21.95 pts) The Economic Times+1 Moneycontrol
Sensex	~ ₹79,811	+~812 pts	₹80,623.26 (+79.27 pts) The Economic Times Moneycontrol

📉 Section 1: Morning Sell-Off — What Caused the Dip?

The day began on a nervous note for Indian equity markets. Both the Nifty and Sensex opened lower, and selling intensified in the first half of trading. Let’s break down the major reasons behind the sharp decline:

🛑 1. U.S. Tariff Tension Fallout

The biggest macro overhang was the new 50% tariff policy announced by the U.S. on Indian imports (25% effective August 7 + 25% more from August 27). This spooked investors fearing a global trade war, weakening sentiment across steel, auto, textile, and metal stocks.

➡️ Sectors like Tata Steel, JSW Steel, Maruti, and textile players saw early selling.

🏛️ 2. FIIs (Foreign Institutional Investors) Turned Sellers

FIIs were net sellers in the previous session (August 6) to the tune of ₹1,267 crore (source: NSE). Concerns around currency weakness, rising U.S. bond yields, and geopolitical risks led to caution from institutional investors.

📊 3. Derivative Expiry Volatility

Being a weekly options expiry, volatility was expected. Traders unwound positions aggressively in the morning, triggering sharp downside moves, particularly in Nifty options-heavy stocks like Reliance, HDFC Bank, and Infosys.

🛢️ 4. Global Market Weakness

Overnight U.S. markets had closed in the red, and Asian peers like Nikkei and Hang Seng were also trading lower due to rising interest rate expectations. This led to weak global cues at open.

🧯 5. Weak Earnings or Stock-Specific Reactions

Some key companies reported weaker-than-expected quarterly numbers, which added to the pressure in the first half. Stocks like Bharti Airtel and Eicher Motors saw mild declines after mixed Q1 results.

✅ Summary:

The combination of tariff shocks, institutional selling, and derivatives volatility dragged down indices in early trade, with Nifty breaching the 24,350 mark.

📈 Section 2: Afternoon Rebound — What Triggered the U-Turn ?

Despite a sharp sell-off in the first half, the Indian stock market staged a stunning comeback in the afternoon of August 7, 2025. The Nifty recovered nearly 270 points from the day’s low, while Sensex surged over 700 points — a move that left many traders and analysts surprised.

So, what changed in just a few hours?

Here are the 5 key reasons behind the market reversal:

✅ 1. Strong Buying by Domestic Institutional Investors (DIIs)

📊 After FIIs triggered panic selling in the morning, Domestic Institutional Investors stepped in aggressively during the dip — especially in banking and infrastructure stocks.
This helped stabilize market sentiment and triggered a recovery rally.

✅ 2. Short Covering After Oversold Levels

📉 Many stocks had hit oversold zones by midday. Traders holding short positions rushed to cover, fueling sharp upside momentum — especially in Nifty Bank and Auto sectors.

✅ 3. Stabilization in Rupee & Bond Yields

📉 The Indian Rupee, which weakened early morning due to U.S. tariff news, stabilized by afternoon.
Similarly, bond yields softened slightly, indicating cooling investor anxiety and improving sentiment.

✅ 4. Recovery in Global Markets

🌍 European indices opened with minor gains and U.S. futures turned mildly positive, suggesting global investors were digesting the U.S.–India tariff news better than expected.

✅ 5. Optimism Around Possible Policy Support

🧑‍💼 Market chatter pointed toward a potential response from the Indian government or RBI — either in the form of trade talks or liquidity support.
This created bullish sentiment in export-heavy sectors like textiles, auto, and metal.

📊 Section 3: Sectors in Focus — Who Lost, Who Gained

Despite early weakness, Indian markets saw a sharp sectoral rotation in the second half of August 7. Several heavyweight sectors led the rebound, while a few lagged behind.

Here’s the breakdown based on real-time Angel One market data 👇

🔼 Top Gaining Sectors

💊 Pharma (+1.01%)

Defensive buying returned in pharma stocks like Cipla, Dr. Reddy’s, and Divis Labs, offering a safe haven amid macro uncertainty.

💻 Technology (+1.00%)

Tech stocks rebounded as U.S. bond yields cooled. Wipro, Infosys, and HCL Tech saw strong recovery post-noon.

🚗 Auto (+0.76%)

Renewed FII interest and strong monthly sales data supported Tata Motors, Maruti, and Hero MotoCorp.

🛠️ Metal (+0.72%)

Metal stocks gained on hopes of China’s stimulus and optimism around export redirection. JSW Steel, Tata Steel climbed steadily.

🏦 Banking (+0.51%)

Post-lunch rally was led by HDFC Bank, ICICI Bank, and Kotak Bank. Nifty Bank ended up by 110 points.

⚡ Midcap & Energy Stocks

Stocks like KPIT, LTTS, and Adani Energy helped lift the broader market sentiment, especially in Midcap and F&O segments.

🔻 Sectors That Underperformed

🏢 PSU Stocks (-0.40%)

Despite the broader rally, PSU stocks lagged as investors booked profits. ONGC, Coal India, and others in the PSE Index ended in the red.

🏗️ Realty & Cement

Real estate stocks (-0.19%) and cement (-0.04%) remained weak due to rising bond yield concerns and fears of higher interest rates.

🧿 Heavyweight Highlight – Reliance’s Strong Intraday Reversal

📉 Reliance Industries, which showed weakness in the morning session, bounced back smartly to close at ₹1389.40, helping support Nifty in the late rebound. As Nifty’s largest weight, Reliance played a crucial role in the market recovery.

📊 Section 4: Technical View — What Charts Are Saying

August 7 was a high-volatility day, but technical patterns signaled a sharp recovery in the latter half. Here’s a final breakdown

✅ Gap-Down, Then a Quick Bounce

📉 Markets opened sharply lower on tariff fears and risk-off sentiment. Nifty dipped below 24,350, and Sensex fell to an intraday low of 79,811.29, but both reversed strongly in the final hour of trade.

✅ Oversold Levels & Hammer Candlestick

📈 A prominent bullish hammer candle formed on the Nifty daily chart, with a long lower shadow from the intraday bottom (~24,344) and a close above prior session’s close (~24,596 vs 24,574). This pattern often signals strong buying interest from panic lows.

✅ Strong Volume Surge & Institutional Support

📊 The rally was backed by high volume—especially in heavyweights like Tech Mahindra, Hero MotoCorp, and HDFC Bank—confirming that heavy hands supported the bounce, not just retail traders.

✅ Key Support & Resistance Levels

📌 Support Zones:
• Nifty found support at 24,350–24,400, particularly around 24,344, where the intraday low was tested and reversed.
• Pivot support levels also highlighted 24,414, 24,346, and 24,235 zones.

📌 Resistance Zones:
• Short-term resistance is noted between 24,660–24,670—a decisive breakout above this could push the index toward 24,850.
• On the upside, extended targets include 24,814.
⸻

✅ India VIX & Volatility Cooldown

📉 Russia volatility index dropped nearly 2–3% by close, signaling reduced fear and improved risk sentiment.

📌 Summary Table (H3)

Index	Yesterday Close	Intraday Low	Today Close	Price Change
Nifty	24,574.20	~24,344.15	24,596.15 (+21.95)	Wicks indicate strong buying at lower levels
Sensex	80,543.99	79,811.29	80,623.26 (+79.27)	Bounce from day’s low confirmed reversal

🧠 Technical Takeaway

Market structure held key supports, sellers were clearly absorbed, and the sharp bounce formed a classic reversal setup. However, major resistance close to 24,660–24,700 remains the next hurdle for confirmation of a sustained uptrend. If the global environment supports, the zone could lift to 24,800–24,850.
Bearish risk remains if support near 24,350 fails to hold.

🧠 Section 5: for the Market? Analysts Weigh In

📌 After today’s volatile session — a sharp dip followed by a strong recovery — market analysts are turning cautiously optimistic. Here’s what top voices in the market are saying about what lies ahead:

🔍 1. “Volatility Will Stay Elevated This Month”

🗣️ Angel One Research

“Given the tariff tensions between India and the US, we may continue to see volatility in the near term. However, India’s domestic strength — especially in sectors like Auto, Pharma, and Tech — will provide downside support.”

💸 2. FIIs May Turn Selective But Not Be

🗣️ Motilal Oswal Securities

“Foreign Institutional Investors (FIIs) are showing mixed signals. While they are cautious globally, Indian earnings have been resilient. Expect stock-specific action, especially in largecaps.”

📈 3. Nifty May Target 24,850 if Resistance Breaks

🗣️ ICICI Direct Technical Outlook

“Nifty’s short-term resistance is placed at 24,660–24,670. A clean breakout could trigger a rally towards 24,814–24,850. Traders should watch for sustained momentum above these levels.”

💼 4. Banking & Auto to Lead the Charge

🗣️ HDFC Securities

“The intraday leadership from Bank Nifty and Auto stocks is not random — these are the sectors with strong Q1 visibility. Continue tracking them for possible trend continuation.”

📉 5. Global Cues Still a Risk Trigger

🗣️ Kotak Securities

“Any escalation in trade tension or fresh rate-related commentary from the U.S. Fed could unsettle the markets again. Traders should keep an eye on global equity performance.”

✅ Consensus Summary:

Markets have shown strength, but sustainability depends on global cues and whether Nifty breaks above 24,670 decisively. Sectors like Banking, Auto, and IT are key to watch in the coming sessions.

✅ Conclusion: Trade Smart Amidst Volatility

📉 Today’s market action was a perfect lesson in intraday volatility and trader psychology. From a sharp morning sell-off to a powerful afternoon rebound, the Indian indices showcased both fear and resilience.

📊 Key lessons for traders:

💡 Don’t panic in the first half. Markets often digest overnight global cues before stabilizing.
📉 Volatility is opportunity — if timed correctly, strong intraday moves can be profitable.
🔍 Technical levels matter. Reversals near key supports (like 24,344 on Nifty) shouldn’t be ignored.
📈 Sector rotation is real. Pharma, Auto, and Tech took leadership — watch these in the coming week.
🌍 Global events still matter. Any escalation on the tariff front can quickly change sentiment again.

📌 Final Word:
With uncertainty still in the air, stay alert, stay informed, and trade with discipline. Avoid chasing rallies blindly — instead, plan your entries around key levels and follow the market’s structure, not emotions.

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