Why is stock market falling today? Sensex slumps over 900 pts, Nifty slips below 24,800; 5 key reasons behind the decline

Indian equity markets traded sharply lower on Tuesday, with financial and IT stocks dragging the indices down. The pullback comes after a recent rally driven by easing U.S.-EU trade tensions.

The BSE Sensex tumbled 900 points to the day’s low of 81,261, while the Nifty50 dropped below 24,750.

Among sectors, Nifty Bank and Financial Services declined 0.7%, while Nifty IT, Auto, FMCG, and Oil & Gas dropped between 0.5% and 1%. In the broader market, Nifty Midcap slipped 0.4%, while Smallcap100 traded flat.

The market capitalisation of all listed companies on BSE declined by Rs 2.56 lakh crore to Rs 442.23 lakh crore.

Why is stock market falling today? Here are key reasons

1. Profit Booking After a Sharp Rally

Indian equities had witnessed a strong run-up over the past two weeks, with the Sensex and Nifty gaining around 4.1% following the Operation Sindoor ceasefire. The market capitalisation of BSE-listed firms surged by Rs 28.4 lakh crore during this period. The sharp uptick led to stretched valuations, prompting investors to book profits at higher levels.

2. Muted Q4 Earnings Growth

Despite the rally, Nifty50 earnings for Q4 have grown less than 6% year-on-year — a figure that falls short of market expectations. The Sensex has gained over 10,000 points since April lows, but analysts say current valuations of 21–22x forward earnings demand stronger corporate performance.
“Q4 earning season is turning out to be muted yet again in absolute terms, with 5-10% earnings growth depending on sectors,” said Atul Bhole, EVP & Fund Manager, Kotak Mahindra Asset Management.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that earnings estimates for FY26 and FY27 have been revised downward. “With Nifty trading at ~22x/19x for FY26E/FY27E, there is a risk to our 26,000 target if EPS downgrades continue,” he said.

3. Rising U.S. Treasury yields

The yield on the U.S. 10-year Treasury has risen to 4.48%, up from 4.25% in late March. Higher yields tend to attract global capital to U.S. bonds, often at the expense of emerging markets like India. The 2-year Treasury yield has also climbed to 3.98% from 3.6% in April, adding further pressure on foreign fund flows into Indian equities.

4. Weak Global Cues

Asian equities mirrored the weakness seen on Wall Street. The MSCI Asia ex-Japan index fell 0.4%. Investor sentiment remained cautious after U.S. President Donald Trump extended the deadline for trade talks with the European Union to July 9, delaying planned tariffs.

In regional markets, China’s CSI300 fell 0.56%, Shanghai Composite declined 0.33%, while Hong Kong’s Hang Seng and Japan’s Nikkei 225 both slipped around 0.15%.

5. RBI Dividend Disappoints Market Expectations

The Reserve Bank of India recently announced a record Rs 2.69 lakh crore dividend payout to the central government — a 27% increase from last year. However, this fell short of some market estimates, which anticipated a figure closer to Rs 3 lakh crore.

Under the revised Economic Capital Framework, the RBI has raised its contingency reserve range to 6–7.5%, up from 5.5–6.5%, limiting the dividend payout.

Murthy Nagarajan, Head of Fixed Income at Tata Asset Management, said the lower-than-expected dividend may disappoint the stock market in the short term. He said, “There could be some profit booking next week after the strong rally in the past 10 days.”