Nifty 50, Stock Market Today Live Updates: Dalal Street in Red – Sensex Down 500+, Nifty Breaks 24,500

The latest tariffs imposed by US President Donald Trump on Indian goods may seem like a trade issue on the surface, but the impact runs much deeper, especially for India’s financial markets.

Ajay Yadav, CEO & CIO at Wise Finserv, has been closely monitoring the broader fallout and highlights a critical trend:

“The ripple effects of U.S. fiscal slippage are being felt across global markets—and India is no exception. With US 10-year Treasury yields hovering around 4.6% and India’s 10-year bond yields at ~6.3%, the yield differential has narrowed to a multi-decade low of just 165 basis points. That makes Indian debt less appealing to global investors, and we’ve already seen foreign portfolio outflows worth $2.4 billion in April and May this year alone. In June and July, the trend has continued, with additional net FPI outflows crossing $1.6 billion, largely from equities.”

As US Treasury yields continue climbing and its fiscal deficit grows, the appeal of emerging market assets — especially Indian bonds and equities — has diminished. The shrinking yield gap makes Indian instruments relatively less attractive, prompting foreign investors to pull out.

Although the Reserve Bank of India (RBI) has tried to cushion the impact through liquidity measures and policy tweaks, the combination of heightened geopolitical uncertainty, aggressive US trade policies, and capital outflows presents a serious challenge.

India now faces the dual threat of rupee depreciation and reduced foreign inflows into both equity and debt markets, putting pressure on external financing and overall market stability.