The Indian stock market suffered losses for the third consecutive session on Monday, July 28, as concerns over a delayed India-US trade deal with the August 1 deadline approaching, relentless foreign capital outflows, and uninspiring Q1 results continue to dampen investor risk appetite.
On Monday, July 28, the Sensex opened at 81,299.97 against its previous close of 81,463.09 and dropped nearly 700 points, or 0.84 per cent, to an intraday low of 80,776.44. The NSE counterpart Nifty 50 fell 0.80 per cent to an intraday low of 24,646.60.
Eventually, the Sensex closed 572 points, or 0.70 per cent, lower at 80,891.02, while the Nifty 50 settled at 24,680.90, suffering a loss of 156 points, or 0.63 per cent.
The market witnessed a broad, across-segments selloff as the BSE Midcap index also fell by 0.73 per cent, while the Smallcap index plunged by 1.31 per cent.
In three sessions, the Sensex has crashed 1,836 points, or 2.2 per cent, while the Nifty 50 has fallen 2.1 per cent.
Investors have seen their wealth erode by over ₹12 lakh crore in just three days, as the market capitalisation of BSE-listed companies fell from ₹460.35 lakh crore on Wednesday, July 23, to nearly ₹448 lakh crore on Monday, July 28.
On Monday alone, the market wiped out almost ₹4 lakh crore, with the total m-cap dropping from ₹451.7 lakh crore in the previous session.
Why did the Indian stock market fall for the third consecutive session?
Here are the five key factors that have been driving the Indian stock market down for the third consecutive session:
1. Uncertainty over India-US trade deal
The India-US trade negotiations appear to have reached a dead end. Neither country has issued a new official communication, and there are no signs of an imminent deal as the August 1 deadline looms.
The key hurdle in the way is the US’ demand for greater access for agriculture, dairy, and genetically modified (GM) products in India, while New Delhi remains resolved to protect the country’s farmers.
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After a deal with Japan, the US announced it had secured a trade deal with the European Union (EU). The trade agreement sets 15 per cent tariffs on most European imports against the earlier proposed tariff of 30 per cent.
“While trade deals with Japan and the EU, thought to be difficult initially, have happened, the much-expected India-US trade deal is even now hanging fire. This has impacted market sentiments,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
2. Heavy outflow of foreign capital
Foreign portfolio investors (FPIs) have been aggressively selling Indian equities amid the stretched valuation of the Indian market.
FPIs have sold Indian equities worth ₹30,509 crore in the cash segment in July so far (25th). In the last five consecutive days, FPIs have sold off Indian stocks worth over ₹13,550 crore in the cash segment.
“FII selling of ₹13,552 crores in the cash market last week has added to the weakness in the market,” said Vijayakumar.
3. Weak earnings raise the risk of valuation mismatch
Weaker-than-expected Q1 results from Indian corporates are a major dampener at this juncture. Experts point out that Q1 earnings have yet to show any major positive surprises.
Unimpressive earnings have raised concerns that the current valuations of the Indian stock market are unsustainable, and it may see a significant correction in the days to come.
“The Q1 results, which are not yet indicating any major positive surprises, are a concern. Investors have to be cautious and stock-specific in this weak phase of the market,” said Vijayakumar.
4. Market lacks fresh positive triggers
The domestic market is struggling in the absence of fresh positive triggers. Although the Indian economy has shown resilience amid global turmoil, the growth narrative alone isn’t strong enough to offset the dampening effects of weak corporate earnings and tariff-related uncertainties.
Sharing his views on the Indian stock market, Shankar Sharma, ace investor and the founder of GQuant, an AI-tech company, pointed out: “I said last year in my interview with your paper, that the Indian bull market was an ageing one. That’s as per my Lake of Returns Theory, LORT. I had posited that we would see near-zero returns from India for the next 3-5 years.”
“Data is clear: last 12 months: 0 returns from India. The economic growth numbers are slowing. Earnings are bad. There is no trigger for a broad bull market. But plenty of small-cap plays around that can make money,” Sharma said.
Meanwhile, the Asian Development Bank (ADB) has trimmed India’s GDP growth forecast to 6.5 per cent for FY26, down from its April estimate of 6.7 per cent, due to concerns over the potential impact of the US tariffs and uncertainty surrounding related policy measures.
India Ratings and Research (Ind-Ra) also lowered its FY26 GDP growth forecast for India to 6.3 per cent from 6.6 per cent projected in December, citing a shift in both domestic and global conditions.
5. Technical factor
Last week, the Nifty formed a small bearish candle with a long upper shadow on the weekly chart.
Experts at Axis Securities highlighted that the index continues to face resistance at the 20-day SMA at 25,259.
They believe a sustained move below 25,000 may extend the decline towards 24,500–24,300, while a decisive breakout above 25,000 could revive positive momentum.
“Chart structure suggests that a break above 25,000 could trigger buying interest, while a fall below 24,750 may attract fresh selling, taking Nifty lower to 24,500–24,300 levels. For this week, we expect Nifty to trade within a broad range of 25,500–24,300, with a mixed to negative bias. The weekly RSI turns negative and remains below its respective reference lines, reinforcing the bearish undertone,” said Axis Securities.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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