Sensex declines nearly 700 pts, Nifty below 24,850: Bajaj Finance Q1 results among key factors behind market decline

Sensex, Nifty see profit-booking in July 25 trading session. 

The benchmark equity indices declined nearly 1 percent on Friday, weighed by weak earnings from Bajaj Finance, continued selling by foreign institutional investors (FIIs) and a negative trend in Asian markets.

Sensex declined 670.05 points or 0.82 percent to 81,514.12, while the broader Nifty dropped 219.55 points or 0.88 percent to 24,842.55.

Bajaj Finance, Bajaj Finserv, Shriram Finance, Bajaj Auto and Hero MotoCorp were among the major laggards, declining up to 6 percent.

Here are the key factors behind the market decline:

1) Bajaj Finance shares fall after Q1 results: Shares of Bajaj Finance slumped nearly 6 percent after the company reported higher credit costs in its two-wheeler/three-wheeler and MSME segments for the quarter ended June 30, 2025. The company noted visible stress in the MSME portfolio since February and expects a moderation in growth in these segments from Q2 onwards.

Despite this, consolidated net profit rose 22 percent year-on-year to Rs 4,765 crore, supported by strong loan growth. Consolidated revenue grew 21 percent to Rs 19,524 crore from Rs 16,100 crore in the year-ago period.

Bajaj Finance shares sink 6% as MSME stress, credit costs weigh; should you buy, sell, or hold shares?

2) Rise in India VIX: The volatility index, India VIX, rose nearly 7 percent to 11.43, indicating rising nervousness among traders. A spike in the VIX typically reflects heightened fear in the market and can lead to increased selling pressure.

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3) Rupee weakens: The Indian rupee depreciated by 19 paise to 86.59 against the US dollar in early trade. A weak domestic equity market and continued foreign capital outflows weighed on the local currency, further dampening investor sentiment.

4) Continued FII selling: Foreign Institutional Investors net sold shares worth Rs 2,133.69 crore on Thursday. Analysts said sustained FII outflows, totalling Rs 11,572 crore over the last four sessions, remain a key overhang for the market.

"The near-term market construct has turned weak," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

5) Weak global cues: Asian markets traded lower, with Japan's Nikkei 225, Shanghai Composite and Hong Kong's Hang Seng all in the red. Overnight, US markets ended on a mixed note, adding to global uncertainty.

6) Rise in crude oil prices: Brent crude futures rose 0.39 percent to USD 69.45 per barrel. Rising oil prices are generally seen as negative for oil-importing countries like India, as they can lead to inflationary pressures.

Technical outlook

Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty may face further pressure if it slips below 24,900.

“The 25,215 region has triggered consolidation that now threatens to evolve into a stronger downtrend. A breach of 24,900 could open immediate downside targets of 24,750–24,650. Further supports lie at 24,450 and 24,000,” he said.

However, he added that if the index holds near 24,900, some sideways movement could be expected, with resistance seen near 25,130.

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