Sensex Fell by 288 Points, Nifty Closed Below 25,500 Today; Here's What Triggered the Drop in Indian Markets

The Indian stock market ended lower on Tuesday, July 2, with both benchmark indices, the Sensex and Nifty 50, closing in the red due to broad-based selling, especially in financials, banking, and realty sectors as mixed global cues and investor caution ahead of the anticipated US-India trade deal kept market participants on edge.

The Sensex fell by 287.60 points or 0.34% to end at 83,409.69, while the Nifty dropped 88.40 points or 0.35% to settle at 25,453.40, slipping below the 25,500 mark. However, after 2:45 P.M. Nifty recovered some of its losses.

Top Gainers And Losers:

Tata Steel, JSW Steel, UltraTech Cement, Asian Paints, Maruti Suzuki, and Trent were among today's top Nifty gainers. While, Shriram Finance, Bajaj Finserv, HDFC Life, IndusInd Bank, Bajaj Finance, and L&T were the front runners on the losing end.

The metal sector rose by 1.4%, and consumer durables gained 1%. Realty stocks also dragged the market lower, with the Nifty Realty index dropping 1.4%, marking its fifth straight session of losses.

The Nifty Bank index also declined by 0.80%, reflecting concerns over valuation and foreign institutional investor (FII) selling. Other underperforming sectors included PSU banks, capital goods, oil & gas, media, and power, all of which lost between 0.4% and 1.4%.

Mid and small-cap indices also saw minor losses. The BSE Midcap index fell 0.18%, and the Smallcap index declined 0.20%, marking the second consecutive day of weakness in broader markets.

Why Did the Indian Stock Market Fall Today?

The Indian stock market fell today due to weak investor sentiment caused by global uncertainties. Investors were cautious because there is no clear update on the India-US trade deal, which is expected to lower tariffs. Although US President Donald Trump mentioned a possible deal, no details have been shared yet.

Adding to the concerns, Trump approved a new US sanctions bill that could impose a 500% tariff on countries still buying oil from Russia, raising fears of global trade tensions and weakening market sentiment, according to Reuters.

"Mixed global cues, particularly ahead of the impending tariff deadline, are driving investor caution. Market attention is gradually shifting to crucial Q1 earnings, which have high expectations.

Underlying trends such as robust macroeconomic fundamentals and increased government expenditure continue to support market resilience. However, being at the breach level of the recent rally, a cautiousness is expected to continue in the near term," said Vinod Nair, head of research, Geojit Investments.

Stock Highlights:

• Asian Paints rose 2.5% even though the CCI ordered a probe into anti-competitive practices.
• IndusInd Bank fell 2.6% after Goldman Sachs downgraded it to 'sell' with a possible 15% drop in value.
• Hyundai Motor shares dropped nearly 6% despite a small rise in monthly sales.
• RITES gained nearly 6% after receiving a $3.6 million order from an African rail company.
• Paras Defence rose 4% after its subsidiary received an anti-drone system order from French company CERBAIR.
• Keystone Realtors gained 3% after being selected by 8 housing societies in Andheri West for a redevelopment project worth ₹3,000 crore.
• Tata Communications jumped 4% after Macquarie said the stock could double in the next 3 years.

Technical Outlook:

"From a technical perspective, in this current correction phase for the Nifty, the previous swing highs of 25,317 and 25,222 could now act as immediate support levels. On the higher side, the band of 25,640-25,740 would continue to serve as a strong hurdle for the Nifty, indicating resistance for any upward moves," Nandish Shah, Senior Derivative & Technical Research Analyst, HDFC Securities.

"The index formed a bear candle signaling profit booking for the third session as it failed to sustain at higher levels and gave up some of its recent gains. The index tested the immediate support area of 25,400 on Wednesday session. Going ahead, index holding above 25,400 on a closing basis will lead to a pullback towards 25,900-26,000 levels in the coming sessions.

Key positional support lies at 25,200-25,100 levels being the confluence of the 20 days EMA and the upper boundary of the recent consolidation breakout area (25,200-24,500), which is expected to act as a support level, showcasing change of polarity, where previous resistance turns into support," noted Bajaj Broking.

Rupee VS Dollar:

The Indian rupee weakened against the US dollar, closing 17 paise lower at 85.71, compared to 85.51 in the previous session.

"The persistent fragility rippling through Asian currencies has exerted a profound downward pressure on the local rupee. This susceptibility has been compounded by the resurgent strength of the U.S. dollar against major currencies, a prevailing risk-averse sentiment among investors, foreign funds outflows, and a sustained dollar demand for hedgers.

The rupee is encountering formidable resistance in breaching the 85.40 mark in past three days amid dollar bargain buying," Dilip Parmar - Senior Research Analyst, HDFC Securities.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, investment, or credit advice. The views and recommendations mentioned are based on publicly available data and expert opinions at the time of writing. Neither the author nor GoodReturns endorses any specific product or financial decision. GoodReturns.in and its affiliates are not responsible for any loss or damage resulting from reliance on the information presented.