On Thursday, the Indian stock market saw a sharp decline, ending a volatile week for shareholders. Both benchmark indexes—the BSE Sensex and NSE Nifty 50—closed deep in the red, weighed down by poor corporate results, continued foreign investor outflow, and uncertainty over the global economy.
The Sensex collapsed 721 points, or 0.88%, to close at 81,463.09, while the Nifty 50 fell 225 points, or 0.90%, to close the day at 24,837. This was the lowest ever closing levels for both indices since mid-June, and it was a broad-based sell-off across sectors.
Key Drivers Behind the Decline
- Disappointing Results: Bajaj Finance and Bajaj Finserv both gave in with poor-than-anticipated performance, which led to a steep plunge in their share prices. Bajaj Finance’s asset quality was also hit hardest, with the gross NPAs climbing to 1.03%.
- Foreign Institutional Selling: FIIs went on their selling spree, selling over ₹11,500 crore of equities in four sessions. This relentless pressure dented investors’ confidence.
- Global Headwinds: Confusing signals from international markets, such as the doubts surrounding U.S.-India trade talks and subdued Asian indices, contributed to the bearish trend.
Valuation Worries: Experts pointed to overvalued large-cap stocks, leading to profit taking and prudence among local investors.
Sectoral Performance
Nearly all sectoral indices closed lower. Nifty Media was the biggest loser, dropping 2.6%, followed by sharp falls in Energy, IT, Auto, and Financial Services. Mid-cap and small-cap stocks were more severely affected, with the BSE Midcap index dropping 1.46% and the Smallcap index declining 1.88%. Indian Energy Exchange (IEX) which saw a dip upto a historical 30% yesterday due to the reports of market coupling, recovered by nearly 10%.
What to look for now?
With the U.S. Fed interest rate decision approaching and trade negotiations unresolved, market volatility seems to continue. Investor tact is recommended and fundamentally solid stocks should be targeted in the face of continuing uncertainty.
The July 25 drop reflects the vulnerability of sentiment and the demand for definiteness on both domestic and foreign fronts. As the earnings season marches on, everyone’s attention will be on future performances and policy guidance to decipher the market’s next direction.
