Home / Business and Economy / Indian Stocks Face Worst July in 6 Years Amid Earnings, Trade Deal Woes
Indian Stocks Face Worst July in 6 Years Amid Earnings, Trade Deal Woes
28 Jul
Summary
- Nifty index down 2.67% in July, worst performance since 2019
- Disappointing Q1 earnings, especially in IT sector, weigh on market
- Delay in India-US trade deal dampens investor sentiment
Indian equities are set to record their worst July performance since 2019, as the benchmark Nifty index has already declined by 680 points or 2.67% so far this month. This weakness comes amid a pronounced slowdown in the IT sector, a key market heavyweight, and delays in the much-anticipated India-US trade deal.
The disappointing Q1 FY26 earnings season has been the primary catalyst for the market's downturn, with revenue and profit growth hitting a nine-quarter low. While the IT sector has been particularly affected, with the index down more than 9% in July, other sectors like private banks, capital goods, cement, and healthcare have shown resilience.
The delay in the India-US trade deal has further dampened investor sentiment, as a deal before the August 1 deadline now looks unlikely due to persistent disagreements on tariffs, especially in agriculture. However, analysts suggest the trade deal's impact may be overstated, as India's domestic-oriented economy limits its direct exposure.
Despite the current weakness, analysts see potential for a recovery in August. The Nifty index appears to have found technical support around the 24,550 to 24,750 levels, and its historical tendency to rebound from these points suggests a robust floor. Analysts believe that even a partial breakthrough in the India-US trade deal, stronger earnings guidance from companies, and the return of foreign institutional investors could trigger a relief rally and push the index toward 25,500 in the near term.
