Stock market selloff: 4 reasons why Sensex fell 2,000 pts in 3 days

Sensex, Nifty: A ‘pedestrian’ earnings growth in Q1 so far, concerns over delays in the US-India trade deal, rich market valuations and reversal of foreign equity flows are weighing in on stock investor sentiment, as the benchmark stock indices Sensex and Nifty were on path to register the third straight session of fall on Monday. 

Data showed Bloomberg consensus EPS estimate expected a flattish Q1 trend, leading to continuation of EPS downgrades in recent weeks, albeit at a slower pace. FPIs, which were net buyers of domestic equities in April, May and June, have sold domestic stocks worth Rs 6,503 crore in July so far. 

With Nifty-50 forward PE multiple rising above the mean level, InCred Equities stayed cautious and expected the index consolidation witnessed in recent months to prolong. 

On Monday, Sensex was trading at 80,776.44. This was 2.42 per cent or 2,009 points below high of 82,786.43 it hit on July 23. From 25,200 level on July 23, Nifty hit a low of 24,646.60 today. 

“As regards the initial companies that have announced their Jun 2025 quarter results till date (8 per cent of all listed companies), sales growth YoY was just 7 per cent. In recent months, Nifty-50 Bloomberg consensus FY26F EPS has seen around 0.5 per cent cut, which is marginal compared to the trend in recent quarters,” it said. 

Emkay Global called the earnings growth so far as ‘pedestrian’. 

It believes uncertainty around the US economy and a lack of visibility on tariffs and trade added to the weakness. Valuation support has diminished, it said adding that the stock market should stay flat-to-weak until there are clear signs of monetary policy transmission and growth recovery.

“We maintain the Nifty-50 index’s Mar 2026F target with just 1 per cent upside at 25,412, thereby projecting the index consolidation trend to prevail till clear signs of economic growth recovery are seen in the festive season. Key downside risks are global geopolitical and trade tensions,” InCred Equities said.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments said FPI selling of Rs 13,552 crore in the cash market last week has added to the weakness in the market. 

“Yet another concern  is the Q1 results,  which are not yet indicating any major positive surprises. Investors have to be cautious and stock-specific in this weak phase of the market. There is safety in largecaps banks like ICICI Bank and HDFC Bank which have come out with the best results in the segment with prospects of improvement going forward,” he said.