TLDR

📈 Market Recap: July 18, 2025

On July 18, 2025, Indian equities ended lower for a third straight session, weighed down by weak bank earnings, persistent FII outflows, and cautious global sentiment. The BSE Sensex fell 501.51 points (–0.61%) to close at 81,757.73, while the NSE Nifty 50 dropped 143.05 points (–0.57%) to settle at 24,968.40. Broader indices declined in tandem, though select IT and metals stocks offered limited support. India VIX rose to 11.62, reflecting heightened volatility. The rupee weakened to ₹86.15/USD, while Brent crude rose 1.3% to $84.70/barrel, driven by geopolitical tensions and supply risks.

Key Drivers:

• Axis Bank earnings disappoint: Axis Bank tumbled over 5% after reporting a sharp dip in Q1 profit, driven by higher provisions and margin pressure. The miss dragged down the entire banking pack, with Nifty Bank falling 1.2%.

• Continued FII outflows: Foreign investors sold over ₹3,600 crore this week, spooked by stretched valuations and tightening global liquidity. The outflows hit large caps the hardest.

• Crude spike & global caution: Brent crude’s rise above $84/barrel renewed inflation concerns. Alongside this, Citi’s downgrade of Indian equities and lingering U.S. Fed uncertainty kept sentiment cautious.

Today’s Top Stories:

1. FIIs Pull Out Over $1 Billion from Dalal Street in 5 Days: Foreign investors sold ₹10,169 crore this week amid valuation worries and global risks, dragging down indices and the rupee.

2. India’s Forex Reserves Fall by $3.06 Billion: Reserves slipped to $696.67 bn as RBI intervened to support the rupee near ₹86.15/USD; second weekly drop.

3. India, France to Collaborate on ₹61,000 Cr Fighter Jet Engine Deal: Defence Ministry greenlit co-development with Safran to boost indigenous jet engine capacity under AMCA.

4. Airtel Records 40% Market Share; Crisil Upgrades Rating: Airtel hit a record revenue share in FY25; Crisil upgraded the rating to AAA on improved financials.

5. Citi Downgrades India to ‘Neutral’ on Elevated Valuations: Citi lowered India’s rating, citing expensive valuations and weakening earnings momentum, while shifting preference to China and Korea. India’s macros remain a long-term positive.

Market Snapshot

Nifty 50 Index Heatmap

Top Gainers & Losers

TOP STORIES

1. FIIs Pull Out Over $1 Billion from Dalal Street in 5 Days

• Massive outflows:  Foreign Institutional Investors (FIIs) have withdrawn over ₹10,169 crore (USD 1 billion) from Indian equities in five consecutive sessions through July 17, reversing early-month inflows.

• Key triggers: The sell-off was driven by elevated valuations, Citi’s downgrade of India to “Neutral”, and rising global macro risks, including crude price spikes and U.S. inflation concerns.

• Market impact: The outflows intensified pressure on large-cap stocks, weakened the rupee to ₹86.20/USD, and contributed to the third straight weekly decline in benchmark indices.

2. India’s Forex Reserves Fall by $3.06 Billion

• Reserve update: According to RBI data released on Friday, India’s foreign exchange reserves declined by $3.06 billion to $696.67 billion for July 11. This marks the second consecutive weekly fall in reserves.

• Breakdown: The drop was primarily led by a $2.48 billion fall in foreign currency assets, while gold reserves dipped by $498 million. Holdings of IMF Special Drawing Rights (SDRs) and India’s reserve position with the IMF also declined marginally.

• Market impact: The fall is attributed to the RBI’s intervention in the forex market to stabilise the rupee, which hovered near ₹86.15/USD. While reserves remain robust, continued depletion could impact the rupee’s cushion against global volatility.

3. India, France to Collaborate on ₹61,000 Cr Fighter Jet Engine Deal

• Strategic partnership: India’s Defence Ministry has endorsed a ₹61,000 crore project to jointly develop a 120 kN thrust fighter jet engine with France’s Safran, featuring complete technology transfer, the preferred offer among global bidders. 

• Program scope: The engine, designed for platforms like the Advanced Medium Combat Aircraft (AMCA), follows a consultative process and technical review. Safran’s roadmap aligns with the AMCA timeline, surpassing the UK’s Rolls‑Royce proposal. 

• Market & defence impact: This marks a significant stride toward ‘Aatmanirbhar Bharat’ in aerospace, enhancing India’s indigenous capabilities while complementing parallel US.

4. Airtel Records 40% Market Share; Crisil Upgrades Rating

• Market milestone: Bharti Airtel achieved a record 40% revenue market share in FY 25, marking a new industry high of 178 bps year-on-year rise in its mobile services business.

• Quality focus: Vice‑Chairman Gopal Vittal emphasised the need for continued "tariff repair" to ensure sustainable returns on capital employed and maintain pricing discipline. 

• Financial endorsement: Credit agency Crisil upgraded the ratings of Bharti Airtel and its holding company to AAA, citing a strengthening financial profile and sustained market leadership.

5. Citi Downgrades India to ‘Neutral’ on Elevated Valuations

• Valuation pressure: Citi downgraded Indian equities from Overweight to Neutral, citing stretched valuations at 23× forward P/E and limited upside potential.

• Regional preference shift: The brokerage now favours markets like China, South Korea, and the Philippines, where earnings momentum and valuations are more attractive.

• Cautious optimism: Citi backs India's macro fundamentals but warns of a near-term slowdown in earnings upgrades and rising foreign investor fatigue.

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