The Indian stock market ended a tough week on a low note, with the benchmark indices closing in the red on Friday. Selling pressure in key sectors like banking and FMCG dragged the market down, pushing the Nifty 50 below the psychologically important 25,000 mark for the first time in weeks.

At the closing bell, the Sensex was down 484.63 points, or 0.59 percent, to settle at 81,774.61. The Nifty 50 fell 139.35 points, or 0.55 percent, to close at 24,972.10. The broader market also felt the heat, with more stocks declining than advancing, and a slight rise in the India VIX signaled that investor nervousness is growing.

What’s Spooking the Market?

Investor sentiment has turned cautious, and for good reason. A mix of muted earnings reports and global uncertainty is weighing on the market, all while valuations remain high.

"At present, market valuations remain elevated, with the Nifty trading at around 22 times forward earnings, levels that are considered expensive by historical standards," said Pratik Gupta, CEO of Kotak Institutional Equities, in a recent interview. He noted that earnings growth has been slow across key sectors like IT, consumer goods, and banking, all of which are expected to post single-digit growth for the full year.

This combination of a slow start to the earnings season and stretched valuations is making investors hesitant to buy, leading to profit-booking at higher levels.

Key Stocks in Focus

The market saw some significant moves in individual stocks based on quarterly results and news flow. Let's take a closer look at the companies that were making headlines and why.

• Axis Bank: The private sector banking giant was a top laggard, with its stock sliding 5 percent. The sell-off was a direct reaction to the bank's weak set of numbers for the June quarter. The bank reported a 4% year-on-year drop in net profit, which was below what analysts had expected. The two biggest concerns for investors were a sharp increase in provisions for bad loans and a rise in fresh slippages, which is when good loans turn bad. The bank explained that this was partly due to a one-time "Technical Impact" from a more prudent way of classifying its loans. However, the weak performance on core parameters like loan growth and net interest margins disappointed the street, leading several brokerages to downgrade their ratings on the stock.

• Wipro: In a bright spot for the struggling IT sector, Wipro gained over 3 percent. The IT major reported a June quarter performance that was better than many analysts had feared, with a nearly 10% year-on-year rise in net profit. While the company's revenue growth was muted, reflecting the ongoing macroeconomic uncertainty and a slowdown in client spending, Wipro impressed the market with its strong deal wins. The company announced that it had secured 16 large deals, including two "mega deals," and that its total bookings were up significantly from the previous year. This suggests a strong pipeline for future revenue and gave investors a reason to be optimistic about the second half of the fiscal year.

• Clean Science and Technology: The specialty chemicals manufacturer saw its stock fall 8 percent after a double dose of negative news. First, the company's Q1 results, while showing revenue growth, also revealed a drop in margins, a key indicator of profitability. More importantly, the company's management commented on a potential promoter stake sale. The promoters, who hold a large majority of the company's shares, are reportedly considering selling a minority stake for family estate planning purposes. While the company stated that the promoters intend to retain majority control, any news of a potential stake sale creates uncertainty and an overhang on a stock, as investors worry about a large supply of shares hitting the market.

• GMDC (Gujarat Mineral Development Corporation): Shares of the state-owned mining company jumped over 10 percent, hitting a record high in an otherwise weak market. The rally was sparked by reports that the Prime Minister's Office (PMO) was likely to hold a key stakeholder meeting to address the ongoing crisis in the supply of rare-earth magnets. GMDC has previously stated its intention to enter the critical minerals space, including rare-earth elements, which are essential for high-tech applications like electric vehicles and renewable energy. The news of a high-level government meeting on this topic has fueled investor excitement about GMDC's potential to become a key player in this strategic sector.

All Eyes on Q1 Earnings

The market will be closely watching the upcoming earnings reports from some of its biggest heavyweights. HDFC Bank, ICICI Bank, and Reliance Industries are all set to announce their Q1 results over the weekend and on Monday.

Expectations are that HDFC Bank will report single-digit growth in net interest income and profit amid soft loan growth. On the other hand, Reliance Industries is expected to post a strong performance, with its key oil-to-chemicals (O2C), telecom, and retail businesses all poised to deliver growth.

The Technical View

According to the technical charts, the market sentiment has turned bearish. "On the technical front, the market formed a bearish candle on the daily chart and a lower top on the intraday chart, signalling continued selling pressure and a negative bias," said Shrikant Chouhan of Kotak Securities.

He believes that as long as the Nifty stays below the 25,255 level, the weak sentiment is likely to continue. The immediate support lies at the 50-day Simple Moving Average, which is around 25,000 for the Nifty. A break below this level could open the door for a further slide towards the 24,900–24,850 zone.

For the latest updates on these earnings and daily market news, be sure to follow TheAIBull.com.