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Stock market under pressure: Here's why Sensex, Nifty are falling today - BusinessToday

Stock Market Under Pressure: Here's Why Sensex and Nifty Are Falling Today

The Indian stock market is experiencing significant turbulence today, with the benchmark indices Sensex and Nifty witnessing sharp declines amid a confluence of domestic and global factors. As of midday trading on July 25, 2025, the Sensex has plummeted over 800 points, hovering around the 78,000 mark, while the Nifty 50 has shed more than 250 points, dipping below 24,000. This downturn marks a continuation of the bearish sentiment that has gripped the markets over the past week, erasing gains from earlier in the month and raising concerns among investors about the sustainability of the ongoing bull run. Market analysts attribute the fall to a mix of macroeconomic pressures, geopolitical uncertainties, and sector-specific challenges, which we will delve into extensively in this analysis.

At the forefront of today's market woes is the persistent inflationary pressure both globally and domestically. Recent data from the Reserve Bank of India (RBI) indicates that consumer price inflation (CPI) has surged to 5.8% in June 2025, driven by elevated food and fuel prices. This uptick has fueled speculation that the RBI might adopt a more hawkish stance in its upcoming monetary policy review, potentially leading to interest rate hikes. Higher interest rates typically dampen economic growth by increasing borrowing costs for businesses and consumers, which in turn affects corporate earnings and stock valuations. For instance, sectors like real estate and automobiles, which are highly sensitive to interest rate changes, have been among the hardest hit today. Shares of major players such as DLF and Tata Motors have fallen by 4-6%, reflecting investor fears of reduced demand due to costlier loans.

Compounding these domestic inflationary concerns are global economic headwinds. The US Federal Reserve's recent decision to maintain elevated interest rates amid sticky inflation has sent ripples across emerging markets, including India. The strengthening of the US dollar against the Indian rupee—now trading at around 85 INR per USD—has made imports more expensive, exacerbating India's trade deficit. This currency depreciation is particularly problematic for import-dependent sectors like technology and pharmaceuticals. IT giants such as Infosys and TCS have seen their stocks decline by 3-5% today, as a stronger dollar erodes the value of their overseas earnings when converted back to rupees. Moreover, the ongoing slowdown in the US economy, evidenced by weaker-than-expected GDP growth figures released earlier this week, has raised alarms about a potential recession, prompting foreign institutional investors (FIIs) to pull out funds from Indian equities. Data from the National Stock Exchange shows net FII outflows of over Rs 10,000 crore in the last three trading sessions alone, a stark reversal from the inflows seen in the first half of 2025.

Geopolitical tensions are another critical factor weighing on market sentiment. The escalation of conflicts in the Middle East, particularly the renewed flare-up between Israel and Iran-backed groups, has disrupted global oil supply chains. Brent crude prices have spiked to $95 per barrel, a level not seen since early 2024, directly impacting India's energy import bill. As a net oil importer, India faces higher fiscal deficits and inflationary pressures from rising fuel costs, which trickle down to transportation and manufacturing sectors. Oil marketing companies like Indian Oil Corporation and Bharat Petroleum have bucked the market trend with marginal gains, but refiners and airlines, such as IndiGo, have suffered losses exceeding 5% due to squeezed margins. Analysts point out that these geopolitical risks are not isolated; they intersect with ongoing trade frictions between the US and China, which have led to supply chain disruptions in electronics and semiconductors. Indian firms reliant on Chinese imports, including those in the consumer durables space like Havells and Voltas, are facing inventory shortages and cost overruns, further eroding investor confidence.

Sector-specific issues are also playing a pivotal role in the market's decline. The banking sector, often considered the backbone of the Indian economy, is under strain from rising non-performing assets (NPAs) in the retail and small business lending segments. Public sector banks like State Bank of India and Punjab National Bank have reported a uptick in bad loans in their latest quarterly filings, attributed to economic slowdowns affecting borrower repayment capacities. This has led to a broader sell-off in financial stocks, with the Nifty Bank index down by over 3%. Private lenders such as HDFC Bank and ICICI Bank are not immune, as concerns over asset quality and potential regulatory tightening by the RBI add to the pressure. In the technology sector, the hype around artificial intelligence (AI) and digital transformation has cooled off, with valuations appearing overstretched after a prolonged rally. Disappointing earnings guidance from global tech leaders like Microsoft and Google has had a knock-on effect on Indian counterparts, contributing to the Nifty IT index's 4% drop.

Adding to the complexity is the impact of regulatory changes and policy announcements. The Indian government's recent budget for 2025-26, presented earlier this month, introduced higher capital gains taxes on equity investments, which has deterred retail participation. Short-term capital gains tax has been hiked to 20% from 15%, while long-term gains now attract a 12.5% levy without indexation benefits. This policy shift, aimed at boosting revenue for infrastructure spending, has been met with criticism from market participants who argue it discourages long-term investing. Retail investors, who have been a driving force behind the market's resilience post-pandemic, are now adopting a wait-and-watch approach, leading to reduced trading volumes and heightened volatility. The India VIX, a measure of market fear, has surged to 18, its highest in three months, signaling increased uncertainty.

From a technical perspective, the market's fall can also be traced to overbought conditions following a record-breaking rally earlier in the year. The Sensex had touched an all-time high of 82,000 in June 2025, fueled by strong corporate earnings and optimistic growth projections. However, with the price-to-earnings (P/E) ratio of the Nifty hovering around 25—well above the historical average of 20—analysts had been warning of a correction. Today's decline has breached key support levels, with the Nifty slipping below its 50-day moving average, a bearish signal that could trigger further selling if not reversed soon. Chartists are eyeing potential downside targets at 23,500 for the Nifty, which would represent a 5-7% correction from recent peaks.

Expert opinions on the current scenario vary, but there is a consensus that this dip could be a healthy correction in an otherwise bullish long-term trend. Rohit Srivastava, founder of IndiaCharts, notes, "The market is reacting to a perfect storm of inflation, geopolitics, and policy changes. Investors should focus on quality stocks with strong fundamentals rather than chasing momentum." Similarly, Ambareesh Baliga, an independent market analyst, advises caution: "FII outflows are a major drag, but domestic institutional investors (DIIs) have been net buyers, providing some cushion. We might see a rebound if global cues improve, but volatility is here to stay."

Looking ahead, the market's trajectory will likely depend on upcoming economic indicators, such as India's Q2 GDP data due next month and the US jobs report. Positive surprises could stem the bleeding, but persistent high inflation or further geopolitical escalations might prolong the downturn. For retail investors, this period underscores the importance of diversification, with experts recommending a shift towards defensive sectors like FMCG and pharmaceuticals, which have shown relative resilience today. Stocks like Hindustan Unilever and Sun Pharma have only marginally declined, offering safe havens amid the chaos.

In summary, today's fall in Sensex and Nifty is a multifaceted issue driven by inflation, global economic slowdowns, geopolitical risks, sector challenges, and policy shifts. While the immediate outlook appears grim, historical precedents suggest that such corrections often pave the way for stronger recoveries. Investors are advised to stay informed, avoid panic selling, and consider this as an opportunity to accumulate undervalued assets. As the trading day progresses, all eyes will be on closing levels and any late-session recovery attempts, which could set the tone for the week ahead.

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Read the Full Business Today Article at:
[ https://www.businesstoday.in/markets/stocks/story/stock-market-under-pressure-heres-why-sensex-nifty-are-falling-today-486293-2025-07-25 ]