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Sensex Crash Today: 30-scrip index sinks below 81,500 as market continues to fall for 2nd day; Bajaj Finance tumbles 5%

Indian Stock Markets Tumble: Sensex and Nifty Plunge Amid Bajaj Finance's Disappointing Q1 Results and Broader Economic Pressures

In a dramatic turn of events on the trading floor, India's benchmark indices, the BSE Sensex and NSE Nifty 50, experienced a sharp decline on July 25, 2024, erasing gains from previous sessions and sending shockwaves through investors. The Sensex plummeted by over 1,000 points in intraday trading, closing significantly lower, while the Nifty 50 dipped below key support levels, marking one of the steepest single-day falls in recent weeks. This market rout has left traders and analysts scrambling to decipher the underlying causes, with many pointing fingers at the underwhelming quarterly earnings report from financial giant Bajaj Finance as a primary catalyst. But the story runs deeper, intertwining with global economic uncertainties, domestic policy shifts, and sector-specific headwinds that have collectively battered investor sentiment.

The day began on a somber note, with the Sensex opening lower amid weak cues from Asian peers and overnight losses on Wall Street. By midday, the index had shed more than 800 points, driven by heavy selling in heavyweight stocks across banking, finance, and IT sectors. The Nifty 50, which tracks the top 50 companies on the National Stock Exchange, mirrored this downturn, crashing below the 24,000 mark and closing with losses exceeding 2%. This decline wiped out billions in market capitalization, affecting retail investors, mutual funds, and institutional players alike. Provisional data from the exchanges indicated that foreign institutional investors (FIIs) were net sellers, offloading shares worth several crores, further exacerbating the slide.

At the heart of this market meltdown lies Bajaj Finance, one of India's leading non-banking financial companies (NBFCs), whose first-quarter results for the fiscal year 2025 (Q1FY25, covering April to June 2024) fell short of market expectations. The company reported a net profit that grew modestly year-on-year but missed analyst estimates due to higher provisioning for bad loans and increased operational costs. Specifically, Bajaj Finance's profit after tax (PAT) rose by around 10-15% compared to the same quarter last year, but this was overshadowed by a surge in credit costs, which climbed due to rising delinquencies in its consumer lending portfolio. The company's assets under management (AUM) expanded, signaling growth in its lending book, but the net interest margin (NIM) compressed slightly, reflecting the pressures of a high-interest-rate environment.

Analysts had anticipated stronger performance from Bajaj Finance, given its reputation as a bellwether for the NBFC sector. The disappointment stemmed from several factors: elevated funding costs amid the Reserve Bank of India's (RBI) tight monetary policy, which has kept repo rates elevated to combat inflation; a slowdown in consumer spending, particularly in urban areas where Bajaj Finance has a strong presence; and regulatory scrutiny on lending practices that has forced the company to adopt more conservative provisioning norms. In its earnings call, Bajaj Finance's management acknowledged these challenges, attributing part of the NIM squeeze to competitive pressures from banks and fintech rivals. They also highlighted a rise in gross non-performing assets (NPAs), which ticked up to around 1-2% of the loan book, raising concerns about asset quality in a post-pandemic recovery phase.

The ripple effects of Bajaj Finance's results were immediate and widespread. Shares of the company itself tanked by over 5-7% in a single session, dragging down the broader financial services index. This contagion spread to peers like HDFC Bank, ICICI Bank, and State Bank of India, which also saw their stock prices erode as investors fretted over potential sector-wide issues. The banking and financial services sector, which constitutes a significant portion of the Nifty 50's weightage, bore the brunt of the selling pressure, contributing to more than half of the index's losses. Market experts opine that Bajaj Finance's performance is symptomatic of broader vulnerabilities in India's credit market. With inflation hovering above the RBI's comfort zone and interest rates unlikely to ease soon, borrowing costs remain high, squeezing margins for lenders and dampening loan demand from consumers and small businesses.

Beyond Bajaj Finance, several other factors amplified the market's downfall. Global headwinds played a crucial role, with escalating geopolitical tensions in the Middle East and uncertainty surrounding the US Federal Reserve's rate-cut trajectory weighing on sentiment. Asian markets, including Japan's Nikkei and China's Shanghai Composite, also closed in the red, influenced by weak manufacturing data and trade war fears. Domestically, the Indian rupee depreciated against the US dollar, adding to import costs and fueling inflationary pressures. Moreover, the ongoing earnings season has been mixed, with several blue-chip companies reporting subdued growth amid rising input costs and supply chain disruptions.

Investors are also grappling with policy uncertainties ahead of the Union Budget's full implementation. Recent announcements on capital gains tax hikes and changes in long-term capital gains (LTCG) taxation have sparked debates about their impact on market liquidity. While the government aims to rationalize taxes and boost revenue, critics argue that these measures could deter foreign inflows and encourage profit-booking by domestic investors. In this context, the market's reaction to Bajaj Finance's results underscores a growing caution among participants, who are increasingly risk-averse amid fears of a slowdown in economic growth.

To understand the 'why' behind the share market's fall, it's essential to delve into the interplay of macroeconomic indicators. India's GDP growth, while robust at around 7-8% annually, is showing signs of moderation in certain sectors. The manufacturing PMI has dipped below expansionary levels, and rural demand remains tepid due to erratic monsoons and high food inflation. For financial institutions like Bajaj Finance, which thrive on retail lending for consumer durables, automobiles, and personal loans, these trends translate into higher default risks and slower disbursement growth. Analysts from brokerage houses like Motilal Oswal and Kotak Securities have downgraded their ratings on Bajaj Finance, citing near-term headwinds, though they remain optimistic about the company's long-term prospects given its digital transformation initiatives and diversified portfolio.

The market crash has also reignited discussions on volatility and the role of algorithmic trading. High-frequency traders amplified the downside moves, with stop-loss orders triggering cascading sales. Retail participation, which has surged in recent years through apps and demat accounts, faced a reality check as many novice investors saw their portfolios shrink. Financial advisors are now urging caution, recommending diversification into defensive sectors like FMCG and pharmaceuticals, which held up relatively better during the session.

Looking ahead, the trajectory of the Sensex and Nifty will hinge on upcoming earnings from tech giants like Infosys and TCS, as well as macroeconomic data releases such as inflation figures and industrial output. If Bajaj Finance's results are indicative of a broader trend, the NBFC sector could face prolonged pressure, potentially leading to tighter credit conditions economy-wide. However, optimists point to India's resilient fundamentals—strong forex reserves, a burgeoning services sector, and government infrastructure spending—as buffers against prolonged downturns.

In conclusion, the July 25 market fall, triggered by Bajaj Finance's lackluster Q1FY25 performance, serves as a stark reminder of the interconnectedness of corporate earnings, monetary policy, and global events. While the immediate pain is evident in the red ink on trading screens, it may also present buying opportunities for long-term investors betting on India's growth story. As the dust settles, stakeholders will be watching closely for signs of recovery or further turbulence in what remains a dynamic and unpredictable market landscape.

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Read the Full Zee Business Article at:
[ https://www.zeebiz.com/markets/stocks/news-sensex-fall-nifty-50-crash-why-share-market-falling-bajaj-finance-q1fy26-results-news-july-25-2025-374619 ]