The Indian stock market is experiencing a significant downturn, with both the Sensex and Nifty 50 falling sharply. On July 18, 2025, the Nifty 50 dipped below the 25,000 mark, and the Sensex was down over 500 points. This marks the third consecutive week of losses for the Indian stock market.

Factors Contributing to the Market Fall

Several factors are contributing to the current downturn in the Indian stock market:

• Foreign Institutional Investor (FII) Selling: A major reason for the decline is the consistent selling by FIIs. There's a pattern of FIIs selling in the first three months of the year, then turning into buyers for the next three, and resuming selling in July. This behavior is influenced by high valuations in India compared to cheaper valuations in other markets.
• Global Headwinds: Global factors, such as trade tensions and economic uncertainties, are also weighing on the market. Escalating tariff war between the U.S. and its trading partners have created a fragile market.
• Q1 Earnings Season: A weak start to the Q1 earnings season has dampened investor sentiment. Subdued earnings announcements, particularly in the technology and banking sectors, have led investors to exercise caution.
• US-India Trade Talks: Investors are also focusing on current earnings reports and US-India trade talks.
• Sector-Specific Weakness: Certain sectors are experiencing significant selling pressure. The IT index, in particular, has underperformed due to order deferments and reduced investments, which may impact FY26 earnings estimates. Banking and telecom sectors are also facing losses.

Market Performance and Analysis

On July 11, 2025, the Sensex closed with a loss of 690 points, or 0.83 percent, at 82,500.47, while the Nifty 50 settled 205 points, or 0.81 percent, lower at 25,149.85. This broad selloff resulted in investors losing over ₹3 lakh crore in a single session. Analyzing the Nifty 50, it faces heat at 25,000 as caution creeps into the market. A bearish engulfing candle on the daily chart signals increased caution around the 25,000 mark. The index found strong rejection near the psychologically important 25,200 zone, leading to a decisive break below the 9-day Exponential Moving Average (EMA).

Expert Opinions

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, notes that India has been underperforming most markets in July, with a dip of 1.6% in Nifty. He attributes this decline to selling by FIIs and their increasing short positions in the derivatives market, reflecting a bearish outlook. Vinod Nair, Head of Research at Geojit Investments Limited, observed that the domestic market experienced a negative close due to a sober start to the Q1 earnings season and a ramp-up in the tariff threat by the U.S..

Global Context

Despite the downturn in the Indian market, Asian equities have shown modest gains, supported by robust economic data from the U.S.. The S&P 500 and Nasdaq Composite reached new all-time highs, driven by positive economic indicators and strong corporate results. U.S. retail sales rebounded in June, and jobless claims came in lower than expected, signaling resilience in the U.S. economy and lifting investor sentiment globally.

Outlook

The outlook suggests a consolidation phase as investors focus on current earnings reports and US-India trade talks. While the broader structure of higher highs and higher lows remains intact, suggesting that the bullish medium-term trend is still valid, near-term price action warrants caution. A break below 24,800 could intensify the selling pressure and pull the Nifty share price lower toward the 24,600–24,500 zone. On the other hand, a close above 25,100 is required to resume bullish momentum.