The Indian stock market downtrend extended into its fourth consecutive session on Tuesday as mounting concerns over a stalled India-US trade deal, relentless foreign portfolio investor (FPI) sell-offs, weak Q1 corporate earnings, and technical breakdowns combined to batter investor sentiment.
The BSE Sensex opened at 80,620.25, already lower than its previous close of 80,891.02, and continued its descent, touching an intraday low of 80,575.45, a drop of over 300 points or 0.40%. The Nifty 50 also remained under pressure, falling 0.30% to an intraday low of 24,598.60.
In just four trading days, the Sensex has plunged over 2,100 points, nearly 3%, while the Nifty 50 has shed 2.5%, reflecting broad-based market fatigue. More alarmingly, this decline has erased a whopping ₹13 lakh crore in investor wealth, as the total market capitalization of BSE-listed companies slipped from ₹460.35 lakh crore on July 23 to ₹447 lakh crore on July 29.
India-US Trade Deal: What’s Fueling the Indian Stock Market Downtrend?
1. India-US Trade Deal Uncertainty
At the heart of investor anxiety is the lack of clarity surrounding the India-US trade deal, with no new official updates from either side as the August 1 deadline looms. The main sticking point remains Washington’s demand for broader access to Indian markets in sectors such as agriculture, dairy, and GM products—issues New Delhi remains cautious about due to domestic sensitivities.
Meanwhile, President Trump’s recent trade victories with Japan and the European Union, both offering better terms to the US, are being viewed as diplomatic leverage that could pressure India further. “The delay in the India-US trade deal is weighing heavily on sentiment,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2. FPI Exodus Continues
Another major force behind the Indian stock market downtrend is the aggressive pullout by foreign portfolio investors. In July alone, FPIs have dumped over ₹36,591 crore worth of Indian equities, with ₹19,630 crore worth of outflows in just the last six sessions.
FPI sentiment has been negatively affected by the stretched valuations in Indian equities, especially in the large-cap space, coupled with rising global interest rates and the absence of a clear market catalyst.
3. Disappointing Q1 Earnings
The first quarter of FY26 has not inspired much confidence. Corporate earnings have remained largely uninspiring, prompting fears of a valuation mismatch. “There’s been no earnings-led rally. If anything, the results raise serious questions about sustainability,” Vijayakumar added.
Market analysts are warning that unless earnings begin to show strong growth momentum, the correction could deepen. Several frontline companies have failed to meet Street expectations, exacerbating the selling pressure.
4. Absence of Positive Triggers
Even as macroeconomic data has been relatively stable, the market lacks fresh triggers to drive a rally. Shankar Sharma, noted investor and founder of GQuant, remarked, “This bull market has aged. The Lake of Returns Theory (LORT) I’ve spoken about is now playing out. India has delivered zero returns over the last 12 months.”
Adding to the gloom, the Asian Development Bank (ADB) and India Ratings & Research have both cut India’s GDP growth forecasts—to 6.5% and 6.3%, respectively—for FY26, citing global trade frictions and tariff uncertainties.
5. Technical Breakdown Adds to the Pressure
From a technical standpoint, the Nifty 50 breaking below 24,700 has signaled further downside risk. “The 24,400–24,500 zone is now the critical support level,” said Akshay Chinchalkar, Head of Research at Axis Securities.
Hardik Matalia, derivative analyst at Choice Equity Broking, noted, “Until the index sustains above 25,000, the trend remains bearish. A fall below 24,500 could open gates to 24,300–24,200 levels.”
The broader sentiment, therefore, remains one of ‘sell-on-rise’, with high intraday volatility making risk management essential for both traders and investors.
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