On July 11, the Indian stock market faced a broad-based selloff—Sensex dropped 690 points (0.83%), while the Nifty 50 fell to 25,149, down around 205 points (0.81%). Both mid- and small-cap indices also ended lower.
1. Profit Booking at Elevated Levels
Lean valuations in tech and export-heavy sectors led investors to take profits, especially after recent gains. Major stocks in the IT and auto space came under pressure as traders locked in profits ahead of potential downturns.
2. Weak Q1 Earnings Start to Dampen Sentiment
First-quarter earnings kicked off on a soft note. IT giants like TCS, Infosys, and Wipro delivered tepid performance, reinforcing concerns that the sector may face a muted earnings cycle. This weighed heavily on investor confidence.
3. Macro and Global Uncertainty
External headwinds—including unresolved global trade tensions, policy ambiguity, and lingering U.S.-India tariff negotiations—kept investor sentiment fragile. The broader risk-off environment discouraged aggressive positioning ahead of trade outcomes.
4. Foreign Institutional Investors (FII) Pullback
Portfolio flows saw net outflows as FIIs trimmed exposure to equities. Uncertainty around global cues and regulatory developments prompted cautious behavior, leading to subdued liquidity and reduced risk appetite.
5. Derivatives Disruption After Jane Street Ban
SEBI’s recent ban on trading firm Jane Street rattled the derivatives segment, with Bank Nifty and Sensex options volumes dropping significantly. The resulting trading paralysis added to volatility and uncertainty in the market.
Sector Snapshot
- IT and Auto: Down nearly 2%; dragged by weak global demand outlook.
- Defence: Nifty India Defence Index fell ~2%, as investors booked profits following recent gains amid valuation concerns.
- FMCG and Pharma: Key defensive sectors posted modest gains (~0.8%), led by steady Q1 updates.
Analysts advise caution in the near term. Key levels to monitor include support around 25,300–25,460 and resistance at 25,630–25,750. A break below support could test 25,000, while a sustained recovery depends on positive cues from the ongoing earnings season and trade developments.
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