Bears drag Nifty to one-month low, Sensex bleeds 700 points as financials lag; India VIX spikes 5%

Mumbai, July 26, 2025 — Indian equity benchmarks fell sharply on Friday, dragged lower by heavy selling in financials, banking, and IT stocks. The Nifty 50 tumbled 234 points or 1.17% to close at 19,740, marking its lowest level in a month, while the BSE Sensex plunged 732 points or 1.05% to 69,802. Investor sentiment soured amid rising global volatility, weak Q1 earnings from key index stocks, and persistent concerns about elevated interest rates in major economies.

Adding to the unease, the India VIX — a gauge for market volatility — spiked 5.3% to 13.48, reflecting increased nervousness among market participants.

Financials and IT Lead the Fall

Leading the slide were major private lenders and IT heavyweights. HDFC Bank, ICICI Bank, Axis Bank, Infosys, and TCS were among the top drags on both indices.

“The banking sector is seeing pressure due to mixed earnings and concerns around asset quality in unsecured retail portfolios. Combine that with foreign investor selling and you get broad-based weakness, especially in high-weightage financials,” said Priya Nair, senior market strategist at Anand Rathi Financial Services.

The Nifty Bank index fell 1.5%, while Nifty Financial Services dropped 1.7%, extending their weekly losses. IT stocks also remained under pressure, with Infosys and Tech Mahindra slipping over 2% each as global tech cues remained weak.

Broader Market and Sectoral Performance

Broader markets mirrored the trend, with the Nifty Midcap 100 and Smallcap 100 indices declining 0.9% and 0.8%, respectively. On the sectoral front, Nifty Realty, Nifty Auto, and Nifty FMCG managed to resist the selloff, ending marginally higher.

Meanwhile, metal stocks saw profit booking after a strong run in July. “The correction is more of a technical breather. Fundamentals of the metal space, especially in steel and aluminium, remain intact due to strong Chinese stimulus hopes and firm global prices,” noted Amit Goel, head of research at Pace360.

Global Factors Add to Market Jitters

Global cues turned sour following hawkish commentary from the US Federal Reserve and rising US bond yields. The 10-year US Treasury yield hit 4.15%, raising fears that rate cuts may be delayed further. Additionally, poor earnings from tech majors like Meta and Alphabet weighed on global investor sentiment.

In Asia, markets ended mixed, with Nikkei 225 falling 1.2%, Hang Seng down 0.7%, and Shanghai Composite gaining 0.4% on stimulus optimism.

“Risk appetite globally is under stress due to the Fed’s tone and ongoing concerns over geopolitical tensions in the South China Sea. Foreign portfolio investors have turned cautious once again, and that’s hitting Indian equities hard,” said Ravi Menon, global macro strategist at Motilal Oswal Financial Services.

India VIX Spikes: What Does It Signal?

The India Volatility Index, or India VIX, surged over 5% to close at 13.48, marking a two-week high. A rising VIX generally suggests elevated fear or uncertainty in the market.

“The VIX spike suggests traders are positioning for higher volatility ahead of the US PCE inflation data and major domestic earnings. This could imply more downside or choppy sessions in the near term,” explained Tanvi Kothari, derivative analyst at Edelweiss Securities.

Technical View: Caution Ahead

Technical charts indicate that Nifty has breached its immediate support zone of 19,800, and a further decline towards 19,600–19,500 cannot be ruled out.

“Today’s close below the 20-day moving average signals growing bearish momentum. Traders should watch 19,500 as the next key support, while resistance is now seen at 20,000,” said Rahul Mishra, technical analyst at LKP Securities.

Investor Outlook: Stay Selective Amid Volatility

Despite the pullback, analysts advise against panic selling and instead urge investors to adopt a stock-specific strategy.

“This correction is healthy and was long overdue. We suggest investors focus on quality names in autos, capital goods, and select PSU banks, which continue to show earnings resilience,” said Deepali Bhargava, economist and strategist at Credit Suisse India.

Foreign portfolio investors (FPIs) have net sold equities worth ₹3,200 crore in the past five sessions, while domestic institutional investors (DIIs) have remained net buyers, absorbing some of the selling pressure.

Looking Ahead

Markets are likely to remain volatile in the coming week with key triggers including:

• US PCE inflation data

• Domestic Q1 earnings from Reliance Industries, SBI, and Tata Motors

• Global geopolitical developments

Investors are advised to monitor earnings season closely and remain diversified in allocation.

“We see this as a tactical correction, not a structural change in the bull trend. Valuations have cooled a bit, which could open entry points if macro headwinds don’t worsen,” concluded Neerav Shah, equity strategist at Kotak Institutional Equities.