The 30-share BSE Sensex fell 721 points, or 0.88%, to settle at 81,463, while the broader NSE Nifty declined 225 points, or 0.90%, to close at 24,837.
The total market capitalisation of BSE-listed companies fell by Rs 6.5 lakh crore, dropping to Rs 451.6 lakh crore.
Here are five key reasons behind today’s market slide:
1. Financial stocks under pressure after Bajaj Finance results
The financial sector dragged markets lower, with the Nifty Financial Services index falling over 0.9%. Bajaj Finance and Bajaj Finserv led the decline, dropping 4.7% and 2.3%, respectively, amid concerns over asset quality in the MSME segment despite strong Q1 earnings.
Other major lenders including SBI, Kotak Mahindra Bank, Axis Bank, and HDFC Bank also slipped, losing up to 1.2%. Bajaj Finance was the top laggard on the Sensex.
2. Uncertainty over US-India trade deal
Investor sentiment is also weighed down by uncertainty surrounding a possible interim trade deal between India and the U.S. With Washington’s August 1 deadline approaching, negotiations remain stalled over tariffs on agricultural and dairy products.
A breakthrough appears unlikely in the near term, as India’s trade delegation returned from Washington without any resolution. The absence of a formal tariff communication from the U.S. adds to the uncertainty.
3. Continued FII selling
Foreign institutional investors (FIIs) have been net sellers in recent sessions, offloading Rs 11,572 crore worth of Indian equities in the last four trading days alone.
“The near-term market construct has turned weak. Sustained FII selling and the correction in broader markets—especially smallcaps where valuations had turned excessive—will likely keep pressure on the indices,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
4. India-UK Trade Pact
India and the UK signed a long-anticipated Free Trade Agreement (FTA) on Thursday during Prime Minister Narendra Modi’s visit to London. While the deal is expected to benefit sectors like textiles, whisky, and automobiles by reducing tariffs, analysts believe the agreement is unlikely to offer immediate market upside without clarity on trade negotiations with the US.
5. Weak global cues
Asian markets traded lower on Friday as investors booked profits ahead of a crucial week. Japan’s Nikkei fell 0.8% from record highs, while Hong Kong’s Hang Seng dropped 1.1%, and Australia’s ASX 200 declined 0.5%. Mainland Chinese indices also slipped.
Although US futures were slightly higher after strong earnings from Alphabet, the week ahead includes key risk events like the Federal Reserve policy meeting, U.S. payrolls data, and earnings from major tech firms including Apple, Amazon, Meta, and Microsoft.
Broader Market Impact
The Nifty Auto index fell 1.3%, leading sectoral declines, followed by financial services, metal, PSU Bank, IT, and Oil & Gas, all down between 0.9% and 2%. Broader indices underperformed, with the Nifty Midcap100 and Smallcap100 falling 1.6% and 2.1%, respectively.
Technical Indicators
“Nifty has breached its 55-EMA and is hovering near the pivotal support zone of 24,800. A decisive breakdown below this level could accelerate the downside towards 24,500, where fresh round of buying can be initiated. On the higher side, 25250 will act as an immediate resistance,” said Vishnu Kant Upadhyay, AVP – Research & Advisory, Master Capital Services.
Santosh Meena, Head of Research at Swastika Investmart, said, “Technically, the Nifty is falling from the same supply zone of 25500-25800, a level from which we observed a sharp decline in October of last year. It appears the Nifty might take a full year to surpass its fresh all-time high of 26277, which was achieved on September 27, 2024.”
“The immediate demand zone for Nifty is identified between 24800-24735. Below this, 24500 stands as a critical support level where some stability might be observed. However, there remains a risk of the index testing its 200-DMA (Daily Moving Average) around the 24000 level. Upside movement is currently capped around the 20-DMA of 25300. A sustained move above this level is essential to expect any positive momentum,” Meena added.