Sensex Down 700 Pts, Nifty Ends at 25,150. Key Reasons Behind Today’s Market Crash

Indian benchmark indices reported strong losses on Friday as Sensex fell 700 points, while Nifty closed at the 25,150 mark.

Sensex opened at 82,820.76, against previous day’s closing of 83,190.28. The 30-share index fell to an intraday low of 82,442.25, down 1%. Nifty started the day at 25,255.50 against the previous close of 25,355.25.

Sensex fell by 690 points, or 0.83% to close at 82,500.47, while Nifty settled at 25,149.85, down 205 points, or 0.81%.

The overall market capitalisation of BSE-listed firms fell to ₹456.5 lakh crore from ₹460 lakh crore in the previous session.

Why did the Indian stock markets fall today?

Weak Q1 Earnings

TCS reported its Q1 numbers on July 10 where it fell short of market expectations. TCS posted a net profit of $7.42 billion in the June quarter, down 0.59% on a QoQ basis, while being down by 1.12% from the corresponding quarter a year ago. This was TCS’s worst Q1 performance since June 2020, when its revenue fell 7% on a sequential basis.

As per experts, weak quarterly earnings have dampened the market sentiments, which has already remained weak due to tariff-related concerns and elevated valuations.

Tariff concerns

US President Donald Trump announced to impose a tariff of 35% on goods being imported from Canada, starting August 1.

He also hinted at imposing a baseline tariff of 15% to 20% on the countries which didn't receive tariff letters, which is higher than the current 10%

Stretched valuation

Experts remain cautious about the market's premium valuation following weak earnings.

Shibani Kurian, senior fund manager and the head of equity research at Kotak Mahindra AMC said that the market may give moderate returns as valuations are elevated in the near term.

“At present, Nifty trades at a PE (price-to-earnings) of nearly 22 times FY26E EPS (earnings per share), with consensus estimating earnings growth at low double digits for FY26E,” Kurian said.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, underscored that the overvaluation of the broader market is getting corrected.

“India is underperforming markets like South Korea, Germany, Japan and MSCI EM. This is largely due to the elevated valuations in India,” said Vijayakumar.

Investors shift to safe-haven assets

Uncertainty in the equity markets have weakened investor's sentiments as they shift towards safe-haven assets like gold. MCX Gold August 5 contract surged by 1% to an intraday high of ₹97,548 per 10 grams.

Technical factors

Shrikant Chouhan, the head of equity research at Kotak Securities believes that Nifty 50 has also formed a bearish candle on the daily chart.

He is of the opinion that the short-term market scenario is weak, and fresh selling is possible after breaking below the 25,330.

“Below 25,330, the market may slip towards 25,200-25150. A sustained break below 25,170 may lead to further weakness towards the 25,050 level. Look for value buying between 25,150 and 25,050 levels,” said Chouhan.

A decisive break below 25,330–25,300 could lead to extended selling pressure, dragging the index further down towards the 25,100–25,000 levels, said Hardik Matalia, a derivative research analyst at Choice Equity Broking Private Limited.