📉Indian Stock Market in Decline: 5 Key Reasons Behind the Recent Sell-Off

Date: July 28, 2025

The Indian stock market faced a sharp correction on July 28, 2025, with the Sensex tumbling 572 points and Nifty falling below 24,700. This decline has raised concerns among investors, analysts, and policy makers alike. But what’s really behind the sell-off?

In this blog, we break down 5 major reasons that triggered the downtrend and examine key stock-specific developments, including the Kotak Mahindra Bank shocker and TCS job cuts.

1. India–US Trade Deal Delayed

One of the major overhangs on the market is the lack of progress in trade negotiations between India and the U.S. Talks around dairy, agriculture, and digital services are stalled, with a U.S. August 1 deadline looming. This has created uncertainty in FDI and sectoral growth expectations, particularly in tech and pharma.

2. Q1 Earnings Fail to Impress

Kotak Mahindra Bank reported a 47.5% drop in net profit, posting ₹3,281 crore, missing consensus estimates.
The bank’s rising gross NPA (1.48%) and fall in NIM (to 4.65%) created serious concerns about asset quality.
Other major firms like TCS also announced cautious hiring and cost measures, reflecting broader margin pressures.

👉 Read Full Report on Kotak’s Q1 Results

3. Tech Sector Takes a Hit

Tata Consultancy Services (TCS) announced plans to lay off 12,000 employees, blaming internal inefficiencies rather than AI. This move spooked investors, dragging the Nifty IT index down by 0.5%.

➡️ Why TCS Is Cutting Jobs – CEO Clarifies

4. FII Outflows Continue Unabated

Foreign Institutional Investors (FIIs) have pulled out ₹28,500 crore from Indian equities in July. Rising U.S. bond yields, dollar strength, and global rate uncertainty are diverting capital away from emerging markets like India.

5. Technical Breakdown Triggers Panic

Both Nifty and Sensex breached key technical support levels (like the 50-day EMA), triggering algorithmic selling. This trend-driven movement accelerated the market drop, creating a cascading effect on sentiment.

🏦 Spotlight: Kotak Mahindra Bank Crashes 6%

Kotak Mahindra Bank was the biggest loser on the day, dropping over 6% after disappointing results.

📉 High provisions for bad loans.
🚚 Stress in MSME and commercial vehicle segments.
⚠️ Gross NPA worsens to 1.48%.

📊 Explore Market Reaction

📌 Market Cap Wipe-Out: ₹2.2 Lakh Crore Lost

The sharp decline wiped off a whopping ₹2.2 lakh crore from the market cap of top firms. Among the worst-hit were:

TCS
Infosys
Kotak Mahindra Bank
ICICI Bank

Meanwhile, FMCG and auto stocks saw modest gains, cushioning the overall fall.

📉 Market Cap Report by Livemint

🧠 What Investors Should Do Now

✅ Action 💡 Reason Reassess bank holdings Focus on asset quality, avoid aggressive lenders Diversify into defensive sectors FMCG, pharma are showing resilience Track US-India trade developments A positive deal could trigger a bounce Use stop-losses & limit orders Protect capital in volatile trades Focus on strong balance sheets Avoid debt-heavy, low-margin companies

🗣 Final Thoughts

The market correction, while sharp, is part of a healthy reset in valuations. With global and domestic uncertainties playing out, investors need to stay vigilant, diversify smartly, and avoid knee-jerk reactions.

👨‍💼 Need help reviewing your portfolio or setting up a SIP in safe sectors?
📞 Contact: Hitender Tanwar
📧 hitender@gmail.com | 📱 +91-9555554749

🔗 References & Further Reading

Tags: Indian Stock Market, Sensex Today, Nifty Crash, Kotak Bank, TCS Layoffs, Stock Market Analysis, FIIs, July 2025 Market News, Nifty 50, Downtrend