Markets Decline in Early Trade Dragged by Foreign Fund Outflows, Selling in Axis Bank
On Monday, July 21, 2025, Indian equity markets opened with a negative bias, weighed down by foreign institutional investors turning net sellers and significant selling pressure in Axis Bank shares. Early trade saw benchmark indices such as the Sensex dipping by around 40-50 points and the Nifty hovering below 25,000 levels.
The foreign fund outflows, amounting to ₹5,524 crore in July so far, intensified on concerns related to ongoing US-India trade negotiations and global macroeconomic uncertainties. Axis Bank’s Q1 results disappointed investors, triggering liquidation in its stock and dragging the financial services sector at the start of the session.
Despite the early weakness, the market reversed course by afternoon on the back of strong quarterly earnings reports from private banking heavyweights like HDFC Bank and ICICI Bank, along with buying interest in metal, realty, and consumer durable stocks.
By the market close, the BSE Sensex surged 442.61 points to settle at 82,200.34, while the Nifty50 gained 122.30 points to close at 25,090.70, led by resilient banking and financial services sectors. However, sentiments remain cautious given the external trade uncertainties and volatile foreign flows.
Key Factors Behind the Early Dip
Significant outflows by foreign institutional investors amid US-India trade talks uncertainty.
Axis Bank’s underwhelming Q1 performance resulting in sharp stock selling.
Broader midcap and smallcap indices showed weakness with some decline in early trade.
Global cues and investor caution over Fed Chair Powell’s upcoming speech affecting markets.
Sectoral Movement Highlights
Banking stocks reversed early losses with HDFC Bank and ICICI Bank gaining up to 2.7%.
Metals, realty, consumer durables, and media sectors closed positively by session end.
Oil & Gas, IT, Pharma, FMCG, and healthcare sectors ended lower.
Frequently Asked Questions (FAQ)
Q: Why did Indian markets decline in early trade on July 21, 2025?
A: Markets fell early due to foreign fund outflows and selling pressure on Axis Bank following disappointing Q1 results amid trade tensions.
Q: How significant were the foreign institutional investor outflows this month?
A: FIIs have withdrawn ₹5,524 crore in July, reversing prior months of steady inflows, impacted by global and bilateral economic uncertainties.
Q: Did banking stocks perform uniformly during the session?
A: No, Axis Bank faced selling pressure due to weak earnings, while other private banks like HDFC Bank and ICICI Bank gained strongly.
Q: What is the market outlook considering the trade talks and upcoming global events?
A: Markets are expected to remain volatile, closely tracking US-India trade negotiations and global inflation and monetary policy developments.
Q: How did the broader market indices perform by market close?
A: Despite early weakness, Sensex closed up 442 points and Nifty above 25,000, supported by heavyweights and sectoral rallies.
Published on: July 21, 2025
Published by: PAVAN
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