On Monday, the Sensex dropped as much as 527 points from its intraday high to touch a low of 82,010 before recovering partially to close at 82,253.46, down 247 points or 0.30%. The Nifty 50 declined 67.55 points, or 0.27%, to settle at 25,082.30, after dipping to the day’s low of 25,001.95. The broader sell-off has pulled the Sensex down 1.7% and the Nifty 50 nearly 1.7% over the past four sessions.
Meanwhile, the broader market showed resilience, with the BSE Midcap and Smallcap indices gaining on the day.
Here are 4 factors for the fall
1. Global trade concerns
Investor sentiment took a hit after U.S. President Donald Trump ratcheted up his aggressive tariff stance, announcing a 35% tariff on imports from Canada, followed by a 30% tariff on goods from Mexico and the European Union, effective August 1.
Markets are now wary that a prolonged trade war could significantly dent global growth prospects. Closer to home, while reports suggest that Washington and New Delhi are exploring an interim trade deal, uncertainty remains high.
“Market is expecting a U.S.-India trade deal soon with a tariff rate of around 20% for India. If this happens the market will get a sentimental boost. Any disappointment on this front can drag the market further down,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Despite India’s relatively strong economic outlook, GDP is projected to grow over 6% in FY26, analysts warn that the country may not be completely insulated from global volatility.
2. Foreign investors turn sellers
Foreign portfolio investors (FPIs) have turned net sellers of Indian equities after a four-month buying spree, adding pressure on the benchmark indices, particularly large-cap stocks where FPIs have significant exposure.
On July 11, foreign institutional investors (FIIs) offloaded shares worth Rs 5,104.22 crore. In contrast, domestic institutional investors (DIIs) provided some support, purchasing equities worth Rs 3,558.63 crore on the same day.
“There are signs of FPI inflows weakening. After three months of positive inflows FPI has turned negative, though marginally, so far in July,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, adding that the selling on July 11 reflect the first negative inflow number after three months of positive inflows in April, May and June.
The shift in FPI sentiment has weakened momentum in frontline stocks, contributing to the broader correction witnessed over the past week.
“FPI selling in July after three months of buying can be attributed to the recovery in the market from the March lows and the consequent elevated valuations. Since other markets are cheaper relative to India, FIIs may again sell and move money to cheaper markets as a short-term strategy. In H1 2025 Indian market underperformed most markets including the MSCI EM index,” said Vijayakumar.
3. IT stocks extend decline
Shares of IT majors continued in a downtrend as investors continued to react to Tata Consultancy Services’ (TCS) downbeat revenue performance and guarded outlook, with the broader Nifty IT index closing 1.1% lower, emerging as the day’s worst-performing sectoral index.
The index’s decline extended its 4% loss from last week, with sentiment also hurt by broader demand concerns amid U.S. tariff uncertainty.
Shares of Wipro, Infosys, HCL Technologies, Tech Mahindra and TCS declined between 1% and 1.7%, deepening the slide triggered by TCS’s quarterly results released last Friday.
HCL Technologies dropped 1.1% ahead of its earnings on the day.
“On the sectoral front, the IT pack remained under pressure… Looking ahead, markets will react to the Q1 results of IT heavyweight HCL Technologies in early trade on Tuesday, which will be crucial for gauging sentiment in the IT space following the recent disappointment from TCS,” said Ajit Mishra, SVP, Research, Religare Broking.
4. Technical indicators signal caution near key support levels
From a technical standpoint, the Nifty’s breach of key levels during intraday trade indicates a fragile setup ahead of key macroeconomic data releases.
“The Nifty continues to decline as tariff tensions weigh on market sentiment,” said Rupak De, Senior Technical Analyst at LKP Securities, adding that participants are also awaiting CPI data from both India and the U.S., which is further dampening sentiment.
In India, investors are awaiting June inflation data, expected to show a slowdown to a more than six-year low, driven by easing food prices and a high base, according to a Reuters poll of economists.
“Technically, the index slipped towards 25,000 on an intraday basis, which is very close to the 50-DMA. On the lower end, support is placed at 24,900–24,950. If this zone holds, a rally towards 25,350 looks possible. However, failure to sustain above 24,900 may trigger a deeper phase of correction,” De noted.
According to Sudeep Shah, Head of Technical and Derivatives Research, SBI Securities, the Nifty ended in the red for the fourth straight session, “signalling ongoing weakness in the broader sentiment.” He added that the index found some stability near the psychologically crucial 25,000 level, which triggered a modest intraday pullback.
Shah also noted that the daily chart formation suggests continued selling pressure at higher levels. “The Nifty ended the session with the formation of a bearish candlestick on the daily chart, accompanied by a minor lower shadow, indicating continued selling pressure at higher levels. The price action suggests that bears are still in control.”
“Momentum indicators continue to reflect weakness in the trend. Notably, the daily RSI remains below the 50 mark and is trending downward, highlighting the persistence of bearish momentum,” Shah said.
Looking ahead, Shah believes the support zone of 24,980–24,950 will be critical. “A breach below 24,950 could open the gates for further downside towards the next key support area of 24,800–24,770,” he said. On the upside, resistance is seen in the 25,170–25,200 zone.