Why market is down today: Sensex, Nifty tumble in early trade
Indian markets fall, dragged by a nearly 6% drop in Bajaj Finance after Q1 earnings and sustained outflow of foreign funds
Sensex and Nifty tumbled during early trade on Friday (July 25) due to the stocks of Bajaj Finance tanking and persistent outflow of foreign funds. While the BSE Sensex tanked by 407.45 points and dropped 81,776.72 in early trade, the NSE Nifty dropped by 144.3 points to 24,917.80.
Bajaj Finance tanked nearly 6 per cent after its June quarter earnings announcement. Bajaj Finserv fell by over 4 per cent.
Companies like Tata Steel, Hindustan Unilever, Mahindra & Mahindra, UltraTech Cement, Power Grid and Maruti were the worst affected, while Eternal, ICICI Bank, HCL Tech and State Bank of India turned out to be the gainers.
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Outflow of foreign funds
The significant outflow of foreign funds also turned out to be the why the stock market is down today. According to a PTI report, Foreign Institutional Investors (FIIs) sold off equities worth ₹2,133.69 crore on Thursday (July 24). However, Domestic Institutional Investors (DIIs) bought stocks worth ₹2,617.14 crore.
"The near-term market construct has turned weak. Sustained FII selling of ₹11,572 crore in the last four trading days will weigh on the market," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said as quoted by PTI.
As for the Asian market, Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng quoted lower while South Korea's Kospi traded in positive territory. The US market, however, reported a mixed bag.
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India-UK free trade deal
The development comes a day after India and the U.K. signed a landmark free trade agreement on Thursday. From next year, this will result in 99 per cent of Indian exports entering the UK becoming duty-free. Simultaneously, India will also reduce tariffs on British products like whiskey and cars.
The deal, which comes days ahead of the U.S. moratorium on higher tariffs coming to an end, aims to double the USD 56 billion trade between the world's fifth and sixth largest economies by 2030.
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What does it mean for the Indian market
"The India-UK FTA, which is India’s first comprehensive trade agreement with a major developed country, has two implications from the market perspective. One, this FTA will significantly boost trade between both countries, which will be seen as a positive by the market. Two, this FTA, along with many other FTAs signed by India with other countries, projects India as a nation committed to free trade. The fact that this FTA has come during a time of tariff wars is commendable, and hopefully this will improve India’s chances of striking a fair-trade deal with the U.S.," Vijayakumar added.
Sectors like textiles, leather, food processing, automobiles, pharmaceuticals and gems and jewellery, which are expected to benefit from the FTA, will be on the market radar, he said.
(With agency inputs)