It’s becoming an increasingly frustrating and familiar pattern for Dalal Street investors. The Sensex and Nifty start the day on a promising note, often fueled by global cues or positive domestic data, only to lose steam by the end of the trading session — sometimes ending flat, other times dipping into the red.
Today was no exception. Despite early optimism and strong signals pointing toward a bullish start, both indices barely managed to hold on to a 0.10% gain by the afternoon. This kind of choppy, indecisive movement has left retail investors and seasoned traders alike wondering what’s keeping the market from sustaining its momentum.
Market experts are pointing to a complex mix of global and domestic factors that are fueling this volatility. One of the biggest culprits remains the uncertainty surrounding US President Donald Trump’s increasingly aggressive tariff policies. His administration’s decision to impose a 25% tariff on steel imports into the US has triggered a domino effect, escalating trade tensions worldwide.
The European Union responded swiftly with tariffs on $28 billion worth of US goods, targeting key American exports. Canada followed with duties on $20 billion of US products, and analysts believe China — which has already been engaged in a trade battle with the US — is likely to introduce further retaliatory measures. This escalating trade war has rattled global markets, and India is feeling the aftershocks.
Foreign institutional investors (FIIs), who play a significant role in influencing market direction, have been net sellers for more than six consecutive months. The sustained outflow of funds has drained liquidity and dragged down valuations, especially in mid-cap and small-cap stocks, which rely heavily on institutional support.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., described 2025’s market performance so far as “a rough start, driven by dampened investor sentiment and a 26% drop in net equity inflows.” He added that investors remain jittery despite strong domestic data, as global uncertainty continues to overshadow local positives.
Even encouraging inflation numbers — both in India and the US — haven’t been enough to lift market sentiment. Normally, stable inflation figures would signal a healthy economy and encourage buying activity, but the current global environment is proving too hostile.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained that while India’s market fundamentals remain intact and valuations appear fair — even attractive in certain pockets — the worsening trade war and ongoing FII sell-off are keeping the indices from mounting a sustainable rally.
He noted, “Under normal circumstances, this kind of positive macro data would have given the stock market a strong push. However, the global backdrop is too unfavorable right now, with the trade war triggered by Trump getting worse by the day. It’s causing foreign investors to pull their money out and look for safer alternatives, leading to this persistent market weakness.”
Trump’s administration has also signaled that more tariffs could be on the way, which has added another layer of anxiety. The uncertainty over how long the trade war will last — and how deeply it will cut into global economic growth — has left many investors on edge. This apprehension is reflected in the Indian markets, where even brief rallies are met with heavy selling pressure by the end of the day.
With no clear resolution in sight and FIIs continuing to dump stocks, market watchers believe this pattern could persist for a while. Analysts are advising investors to shift focus toward more defensive, domestic consumption-driven sectors — such as FMCG, healthcare, and utilities — which are less vulnerable to global shocks.
“India’s long-term growth story remains strong,” Vijayakumar added. “But for now, investors may need to adopt a cautious, stock-specific approach instead of chasing index-level gains. Until global uncertainties ease, this tug-of-war between bullish starts and bearish finishes may continue to dominate Dalal Street.”
For retail investors, the challenge is staying patient and avoiding panic selling during these turbulent sessions. Market veterans believe the key to navigating this period is staying focused on long-term fundamentals while bracing for more short-term volatility.
