Why the Market’s Late August Fall Was No Surprise ‘Gujju Traders’ Prediction Decoded
The last week of August 2025 proved to be a turbulent one for Indian equities. While global cues added to the volatility, Gujju Traders had already flagged the possibility of a sustained decline. The prediction was rooted in clear economic and political signals that many ignored but seasoned investors could not afford to miss. Let’s decode the reasons in detail.
1. Government’s Failure in Negotiations with Trump on Tariffs
One of the most critical triggers was the government’s inability to negotiate effectively with U.S. President Donald Trump on the proposed tariff hikes targeting Indian exports.
- Why It Mattered: India’s key export sectors such as textiles, IT services, and pharmaceuticals face significant exposure to U.S. markets. Any increase in tariffs directly impacts earnings and investor confidence.
- Market Reaction: Investors interpreted the lack of a deal as a sign that Indian corporates would face higher costs, lower margins, and subdued global competitiveness. This immediately translated into FII selling pressure.
2. GST Cut – A Misinterpreted Signal
The announcement of a GST cut should have been a celebratory moment for businesses and consumers. However, sharp investors saw it differently.
- The Real Signal: Instead of a proactive growth push, the GST cut was seen as a damage-control measure to offset the negative impact of tariffs.
- Why It Backfired: By rushing into a two-slab GST cut, the government indirectly admitted that negotiations with Trump had failed. Instead of boosting confidence, the move created a sense of policy weakness in the eyes of investors.
👉 Investor Psychology: Markets don’t just react to numbers; they react to confidence. The GST cut, instead of being read as a bold reform, was interpreted as a defensive compromise.
3. FIIs Read Between the Lines
Foreign Institutional Investors (FIIs), often the quickest to respond to global developments, were swift in their reaction:
- They saw India’s GST cut as a hidden acknowledgment of external weakness.
- Tariffs meant lower exports, weaker earnings, and a dent in India’s “growth story” narrative.
- Result: Heavy outflows in the last week of August, dragging down both Nifty and Sensex.
4. Domestic Investors Followed the Sentiment
Retail and domestic institutional investors (DIIs) initially supported the market with steady buying. But as the news cycle kept focusing on “Failed Negotiations” and “hidden signals of GST cuts,” even domestic participants started booking profits.
This psychological chain reaction amplified the sell-off.
5. Technical Breakdown Confirmed the Fall
Markets also confirmed weakness on the technical side:
- Nifty Support Zones Broken: Key supports at 25,000 and 24,850 were breached.
- Bank Nifty Dragged: Banking and financials, which were expected to lead the festive rally, came under pressure due to fears of lower loan demand in export-heavy sectors.
- Breadth of Market Weak: Midcaps and small caps, usually a sign of retail optimism, also saw selling pressure.
Gujju Traders’ Prediction Came True
Weeks before the fall, Gujju Traders highlighted these clues:
- Tariff Negotiation Risks – Trump’s aggressive stance was not being countered effectively by the Indian government.
- GST Cut as a Warning Sign – Rather than celebrating, investors should interpret it as a red flag.
- Investor Behavior Patterns – Whenever global politics dent India’s negotiation power, FIIs tend to exit aggressively.
Conclusion – Lessons for Investors
The constant market fall in the last week of August wasn’t a random event. It was a result of failed negotiations, policy misinterpretation, and investor psychology.
For smart investors, this was not a surprise. The writing was on the wall, and Gujju Traders had already cautioned about the possible downside.
👉 Investor Takeaway: Markets are not just about numbers they are about reading signals, policy tones, and hidden messages. Those who paid attention to the GST cut clue understood that the government was signaling weakness, not strength.
📌 At Gujju Traders, our philosophy remains clear: Decode the signals before the crowd does.