Chlorine water loses it's yellow color on standing in sunlight because it forms mixture of hypochlorous acid (HOCl) and hydrochloric acid (HCl).
Cl2(g) Is soluble in H2O and form chlorine water, in presence of sunlight as
Cl2(g)+H2O→HCl+HOCl
This is a disproportionation reaction., where chlorine changes it's oxidation state from zero in Cl2 to -1 in HCl and +1 in HOCl. Hypochlorous acid formed in this reaction gives nascent oxygen which is responsible for bleaching action