Trump Tariffs, stock market: 5 key factors that will steer Sensex, Nifty today

Indian equity markets shall brace-up for volatility during the trading session on Thursday after the US President Donald Trump announced a 25 per cent tariffs on India, along with a penalty for being an active trading partner of Russia for crude and defence equipment. Not just the Tariffs announcements, a slew of other factors may also weigh on the traders' sentiments on Dalal Street.

Volatility may persist as global central bank signals and trade negotiations continue to guide sentiment. With July F&O expiry on the radar and key earnings ahead, investors are likely to remain stock-selective, said Vikram Kasat, Head of Advisory at PL Capital.

While the Gift Nifty is signalling a gap down opening for the Indian stock markets in a knee-jerk reaction for the tariff announcement. However, some experts believe that the impact of these announcements will remain limited. Here are some of the five key factors that will steer the action at Dalal Street on Thursday:
 

Trump Tariffs

US President Donald Trump said on Wednesday announcing a 25 per cent tariff, as well as an unspecified penalty announced by Trump in a morning social media post, would strain relations with the world's most populous democracy. However, the United States is still negotiating with India on trade even after the announcement. The Republican president indicated there was wiggle room.

The announcement of a 25 per cent tariff on Indian goods, while higher than anticipated, broadly falls within the 15-20 per cent range that markets had been bracing for. In that sense, it is not entirely unexpected, said Feroze Azeez, Joint CEO at Anand Rathi Wealth. "This move could weigh on near-term export competitiveness and trigger currency volatility if sentiment deteriorates."
 

US FOMC meeting outcome

The US Federal Open Market Committee (US FOMC) held interest rates on Wednesday in a split decision that gave little indication of when borrowing costs might be lowered. It also drew dissent from two Fed governors, both appointees of President Donald Trump who agree with him that monetary policy is too tight.

The Federal Reserve's decision to avoid signaling imminent rate cuts despite relentless political pressure underscores its prevailing caution and has forced investors to dial back expectations for an easing at the next policy meeting. The policy rate controlled by the Fed remains in a 4.25-4.50 per cent range.

The latest FOMC meeting held interest rates as expected, however there were two dissenting voted for the first time in decades, said Ross Maxwell, Global Strategy Lead at VT Markets. "Powell argued inflation remains above the 2 per cent target and stated current policy remained ''moderately restrictive' and stressed that there was no decisions about the September meeting," he said.

Rohit Arora, CEO & Co-Founder, Biz2X & Biz2Credit said that this FOMC meeting was less about immediate action and more about navigating the evolving intersection of inflation, geopolitics, and trade dynamics.
 

FIIs selling

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 850.04 crore on Wednesday. FPIs have pulled out more than Rs 17,500 crore from Indian Equities in the month of July 2025 so far. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,829.11 crore on a net-net basis.

The Indian market is currently being driven largely by domestic investors, and FIIs are almost 85 per cent short, added Azeez from Anand Rathi. "A major sell-off is not expected. Some volatility is likely, any dips will be buying opportunities for investors with even 2-3 year time frames as we have already had a 10 month time correction."
 

Muted Q1 earnings

The investors turned more stock/sector specific based on the Q1 results, said Vinod Nair, Head of Research, Geojit Investments. "Investors shall be focusing on the US Fed’s policy meeting, as its stance on rates and inflation could shape global sentiment," he said.
 

Weekly expiry

The monthly contracts for July series shall expire today, that is Thursday, July 31. The Nifty index exhibited lacklustre momentum ahead of the monthly expiry, but managed to close above its previous day’s high, indicating that buyers are still holding their ground.

The ongoing tussle between bulls and bears has created a broader trading range, with any decisive break-down below the 24,500 mark is likely to reignite the bearish trend. On the momentum front, the Relative Strength Index (RSI) continues to hover near the 40-level, pointing to a lack of strong bullish traction, said Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.