Indian stock markets are experiencing a downturn, with benchmark indices lingering near six-week lows. This decline is attributed to several factors, including anxieties over a potential delay in the India-U.S. trade agreement, sustained foreign capital outflows, and mixed quarterly earnings.
On July 28, 2025, the Sensex fell by 572.07 points, or 0.70%, to close at 80,891.02, while the Nifty 50 settled at 24,680.90, down 156.10 points, or 0.63%. This marked the third consecutive losing session for the Indian stock market. During the session, the Sensex hit an intraday low of 80,776.44, and the Nifty 50 reached 24,646.60.
Foreign portfolio investors (FPIs) have been aggressively selling Indian equities amid concerns about stretched valuations. On Monday, July 28, foreign portfolio investors sold Indian shares worth 60.81 billion rupees ($700.92 million), marking their biggest selling in India since May 30. In July alone, FPIs have sold Indian equities worth ₹30,509 crore in the cash segment. This persistent outflow of foreign capital has added to the weakness in the market.
Investor sentiment has also been weighed down by the uncertainty surrounding a potential trade deal between India and the U.S.. Negotiations between the two countries have remained deadlocked over tariff cuts on agriculture and dairy products, dimming hopes of a trade deal ahead of the August 1 deadline. Concerns have risen after President Trump indicated that most trading partners who do not negotiate separate deals would soon face tariffs of 15% to 20% on their exports to the U.S..
Furthermore, the domestic earnings season has been mixed, with some major companies posting weaker-than-expected numbers. Kotak Mahindra Bank reported a decline in quarterly profit and a deterioration in asset quality and margins, which negatively impacted market sentiment.
Broader market indices also experienced pressure, with the Nifty 100 declining by 0.62%, the Nifty Midcap 100 dropping by 0.84%, and the Nifty Smallcap 100 falling by 1.26%. Sectoral indices followed the broader trend, with Bank Nifty, Nifty Financial Services, Nifty IT, and Nifty Auto all registering losses.
Despite the current downturn, some analysts suggest that India's strong economic fundamentals could provide support to the market. Controlled inflation, a reduced fiscal deficit, and robust tax collections are cited as positive factors. Additionally, domestic institutional investor (DII) inflows have helped cushion the impact of foreign outflows, providing a layer of stability.
Market participants are closely monitoring upcoming monetary policy decisions by the U.S. Federal Reserve and the Bank of Japan, as well as the ongoing earnings season in India, which are likely to influence near-term market direction.
