Day: August 2, 2025

India’s financial markets wrapped up a turbulent week on August 1, 2025, with benchmark indices posting their fifth consecutive weekly decline—the longest losing streak since August 2023. The downturn was fueled by a combination of weak earnings, foreign investor outflows, and escalating trade tensions, particularly with the United States. Meanwhile, the Indian rupee weakened sharply, closing at its lowest level this fiscal year.

Market Snapshot

Index	Weekly Change	Closing Value
Sensex	-1.05%	80,599.91
Nifty 50	-1.09%	24,565.35
Nifty Bank	-2.0%	55,618
Nifty Midcap	-2.0%	56,637
BSE Smallcap	-2.47%	—

More than 35 Nifty constituents ended the week in the red, with Adani Enterprises, Kotak Mahindra Bank, Wipro, Tata Motors, and Tata Steel among the top losers.

Rupee Under Pressure

The Indian rupee fell 100 paise to close at ₹87.52 per US dollar, marking its fourth straight weekly decline. The drop was driven by:

• Strengthening US dollar
• Month-end importer demand
• Uncertainty over India-US trade negotiations
• Limited RBI intervention

What’s Driving the Decline?

• Foreign Institutional Investors (FIIs) sold equities worth ₹20,524 crore, continuing their exit for the fifth straight week
• Domestic Institutional Investors (DIIs) tried to counterbalance, buying ₹24,300 crore worth of equities
• Tariff concerns resurfaced after the US reaffirmed steep import duties on Indian goods
• Weak Q1 earnings from key sectors like IT and pharma added to investor anxiety

Sectoral Breakdown

Sector	Weekly Performance
FMCG	+3.0%
Realty	-5.7%
Metals	-3.4%
PSU Banks	-3.2%
Media	-3.0%
Pharma & IT	-3% to -4.5%

FMCG was the only sector in the green, buoyed by strong earnings from Hindustan Unilever and Varun Beverages.

Expert Take

“The market is holding a lower top formation on daily charts and a bearish candle on weekly charts. Trading below key moving averages signals continued weakness.” — Amol Athawale, VP – Technical Research, Kotak Securities

“Persistent FII outflows and tariff uncertainty have created a defensive mood among investors. Recovery hinges on RBI’s rate decision and clarity on trade talks.” — Vinod Nair, Head of Research, Geojit Financial Services

What’s Next?

Investors are now eyeing:

• RBI’s monetary policy announcement next week
• US-India trade developments
• Inflation data and earnings reports

With sentiment fragile and technical indicators flashing red, markets may remain volatile in the near term.

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India’s Goods and Services Tax (GST) collection for July 2025 reached ₹1.96 trillion, marking a 7.5% year-on-year increase, according to official data released by the Finance Ministry. While this reflects a healthy uptick in gross revenue, the surge in refunds has tempered net growth, prompting renewed discussions around tax rate rationalization and structural reforms.

Key Highlights

• Gross GST Collection: ₹1.96 trillion in July 2025
• Year-on-Year Growth: 7.5% compared to ₹1.82 trillion in July 2024
• Net GST Revenue: ₹1.69 trillion, up just 1.7% YoY due to high refunds
• Refunds Issued: ₹27,147 crore, a 66.8% increase from last year

Domestic vs. Import Revenue

• Domestic GST Revenue: ₹1.43 trillion, up 6.7% YoY
• GST from Imports: ₹52,712 crore, up 9.5% YoY

The strong performance in domestic revenue signals stable consumption patterns, while the rise in import taxes reflects increased trade activity despite global headwinds.

What’s Driving the Refund Spike?

Experts attribute the surge in refunds to the inverted duty structure, where input materials are taxed at higher rates than finished goods. This leads to frequent refund claims, especially in sectors like textiles, electronics, and auto components.

• Domestic Refunds: ₹16,983 crore, up 117.6% YoY
• Import Refunds: ₹10,164 crore, up 20% YoY

Tax professionals have called for rate harmonization to reduce refund dependency and simplify compliance.

Expert Commentary

“Despite some global pressures and temporary dips, the overall trend shows a stable consumption pattern and consistent growth trajectory of the economy.” — Saurabh Agarwal, Tax Partner, EY India

“The increase in refunds augurs well for businesses as it indicates stability in the online refund processes and quicker refund sanctions.” — M.S. Mani, Partner, Deloitte India

State-Wise Performance

• High Growth States: Andhra Pradesh (14%), Punjab and Haryana (12%)
• Moderate Growth States: Maharashtra, Tamil Nadu, Karnataka, Gujarat, and Uttar Pradesh (under 10%)

These figures reflect regional variations in economic activity and tax compliance.

Looking Ahead

While the July figures reinforce India’s fiscal resilience, the muted net revenue growth highlights the need for policy recalibration. The GST Council may revisit rate structures and refund mechanisms in upcoming sessions to ensure long-term sustainability.

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Wall Street was rattled on Friday, August 1st, as a combination of disappointing employment data and sweeping new tariffs triggered the biggest single-day market decline since May. Investors were caught off guard by signs of a cooling labor market and escalating trade tensions, prompting a swift retreat from riskier assets.

What Sparked the Sell-Off?

Two major catalysts converged to shake investor confidence:

• Weak Hiring Numbers The U.S. added just 73,000 jobs in July, far below expectations. Even more troubling, revisions to May and June figures slashed a combined 258,000 jobs from previous estimates. This suggests the labor market may be losing momentum, raising fears of a broader economic slowdown.
• New Tariffs Rolled Out Just hours before the deadline, President Trump signed an executive order imposing tariffs on imports from dozens of countries, including Canada, Brazil, India, and Taiwan. The move marks a sharp pivot toward protectionism and injects fresh uncertainty into global trade.

Market Reaction

The major indexes tumbled:

Index	Change	% Drop
S&P 500	-101.38 points	-1.60%
Dow Jones	-542.40 points	-1.23%
Nasdaq Composite	-472.32 points	-2.24%

Amazon shares plunged 8.3% after disappointing results from its cloud computing division.

Bond Yields and Rate Cut Expectations

The weak jobs report sent Treasury yields tumbling:

• 10-year yield fell from 4.39% to 4.22%
• 2-year yield dropped from 3.94% to 3.71%

Investors now see an 86.5% chance the Federal Reserve will cut interest rates by at least 25 basis points at its September meeting—a dramatic shift from just 37.7% the day before.

Expert Insight

“There’s no way to pretty-up this report. Previous months were revised significantly lower where the labor market has been on stall-speed,” — Brian Jacobsen, Chief Economist, Annex Wealth Management

“The market has been felled by a one-two punch of additional tariffs, as well as the weaker-than-expected employment data.” — Sam Stovall, Chief Investment Strategist, CFRA

What’s Next?

With trade tensions rising and the labor market showing cracks, all eyes are on the Federal Reserve. Will policymakers act swiftly to cushion the blow with a rate cut? Or will inflation concerns keep them cautious?

Either way, the coming weeks promise more volatility as markets digest the implications of a shifting economic landscape.

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