Sensex drops 600 pts, Nifty below 25,200; 3 reasons behind market fall

Stock market today: Equity benchmark indices experienced a sharp fall today as the earnings season started on a subdued note. Tata Consultancy Services' (TCS) earnings update for the first quarter of FY26 (Q1FY26) came-in below D-street expectations, weighing on information technology (IT) shares. That apart, uncertainty over trade tariff deals continued to keep investors on the edge.

 

At 11:45 AM, BSE Sensex was trading at 82,532.62, down by more than 650 points or 0.79 per cent. Whereas, Nifty was down by nearly 180 points or 0.71 per cent, quoting 25,175.45.

 

The majority of stocks from the Sensex pack were trading in the red territory. TCS, Mahindra and Mahindra, Bharti Airtel, HCL Tech and Bajaj Finserv were among the top laggards. On the other hand, Hindustan Unilever (HUL), UltraTech cement, Axis Bank, Asian Paints and Sun Pharma were among the top gainers.

 

 

Nearly all sectors were trading in red with Nifty IT experiencing the steepest fall. The IT index was down by over 1.78 per cent, trading at 37,692 level. Shares of TCS, which alone has a weightage of 6.7 per cent in Nifty50, were down by over 3.04 per cent. Whereas, Infosys was down by over 3.2 per cent.  Nifty Auto followed suit and was down by 1.16 per cent, quoting 23,638. Interestingly, Pharma and FMCG stocks were trading in green. The Nifty FMCG index was up by 0.82 per cent, trading at 56,083, whereas Nifty Pharma was up by 0.83 per cent, quoting 22,260.

 

Broader markets were also trading in red. The Nifty Midcap 100 was trading at 58,749, down by 0.69 per cent. Nifty Smallcap 100 also experienced a similar trajectory and plunged 0.86 per cent, trading at 18,793.

Here's why Sensex, Nifty are falling today:

1. TCS Q1 earnings dent market sentiment

The Q1 earnings season for FY26 started on a dim note. While TCS' net profit figure stood at ₹12,760 crore for the quarter ending June (Q1FY26), recording a 4.4 per cent rise on a sequential basis, the revenue figure dropped 1.6 per cent to ₹63,437 crore during the same period last year. The figure marked a sharper decline than what analysts had estimated.  "TCS reported revenue of $7.4 billion in 1QFY26, down 0.6 per cent quarter-on-quarter (Q-o-Q) in USD terms vs. our estimate of 1.2 per cent growth. It is now clear that productivity benefits are being promised as a part of most deals, potentially dragging future revenues for the industry. In most tech cycles, however, a declining legacy business is offset by a growing new-age business. This kicker is missing in this cycle, putting further pressure on growth," Motilal Oswal said in its report.

 

That apart, the Navratna company, Indian Renewable Energy Development Agency (Ireda), also failed to impress D-street investors. The company reported a 35.6 per cent Y-o-Y decline in consolidated net profit, to ₹246.88 crore in Q1FY26. The recent start to the earnings season has dashed hopes of any upward trajectory in markets, led by surprises in Q1 results.

2. Trade tariff uncertainty

A lot seems uncertain on the tariff front as policy flip-flop continues to paint a blurry picture of the future outlook. From fresh tariff letters to ongoing discussion around trade deals, new developments on tariffs have kept investors guessing about what's coming ahead. While Indian officials are all set to visit Washington in the coming days to strike trade deals ahead of the August 1 deadline, the exact dates of the visit are yet to be confirmed, as per a report by PTI. This has further added to the jittery sentiment. "Given the current environment marked by uncertainty and elevated volatility, traders are advised to adopt a cautious 'wait and watch' approach, particularly with leveraged positions. Booking partial profits on rallies and employing tight trailing stop-losses is recommended," said Mandar Bhojane, senior technical analyst-research at Choice Equity Broking.

3. Valuation concerns

While foreign investors continue to showcase confidence in Indian equities, as evident by the buying spree witnessed in June, D-street analysts are concerned about valuation levels on the Indian market. "The overvaluation of the broader market is getting corrected. India is underperforming markets like South Korea, Germany, Japan and MSCI EM. This is largely due to the elevated valuations in India," said VK Vijayakumar, chief investment strategist at Geojit Investments.