Sensex tanks 650 pts, Nifty slips below 25,000; 5 factors behind today's market fall

Indian equity markets witnessed sharp losses on Friday, with benchmark indices falling for the second consecutive session amid rising global uncertainty and weak investor sentiment. The BSE Sensex plunged over 650 points, while the Nifty slipped below the crucial 25,000 mark, as concerns over macroeconomic headwinds, foreign fund outflows, and muted earnings weighed on risk appetite.

The 30-share Sensex declined as much as 651 points, or 0.8%, to hit an intraday low of 81,608, and the 50-share Nifty fell 193 points, or 0.76%, to 24,919 level. The market saw broad-based selling, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling up to 0.8% during the trade so far.

Analysts cited a combination of global volatility, profit booking at record highs, and cautious commentary from market experts as key drivers behind the sell-off. All sectoral indices were in the red, barring media, with banking, consumer durable, FMCG, healthcare space leading the decline.

“The major reasons for the fall are driven by a combination of weak earnings, banking and FMCG sector drag, foreign investor selling, technical breakdowns, and broader macro uncertainties. Maintaining a cautious stance, with attention to upcoming earnings announcements and developments in trade policy, is prudent in the current environment,” said Khushi Mistry, Research Analyst at Bonanza.

On the BSE Sensex pack, 25 out of 30 stocks were trading in the negative terrain, except Tata Steel , Bajaj Finance , Infosys , HCL Tech, and UltraTech Cement. The top losers on the Sensex were Axis Bank , BEL, Bharti Airtel , Kotak Mahindra Bank, Tech Mahindra, and HDFC Bank.

Axis Bank was the top laggard, falling over 7% in intraday trade after it reported lower than expected earnings in June quarter, weighed down by higher provisions.

Reliance Industries , the country’s most valued stock, was trading marginally lower as investors turned cautious ahead of its June quarter earnings report slated to be released later in the evening.

Here are key factors that triggered sell-off in stock market:

Sustained selling by FIIs

Foreign institutional investors (FIIs) turned net sellers for the second consecutive session on July 17, offloading equities worth ₹3,694 crore. Meanwhile, domestic institutional investors (DIIs) continued their buying spree for the ninth straight session, purchasing equities worth ₹2,820 crore.

In July, so far, India has been underperforming most markets, with a dip of 1.6% in Nifty. A significant contributor to the decline is the selling by FIIs. “There is a clear pattern in FII activity this year so far. They were sellers in the first three months," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

"Along with selling in the cash market FIIs have been increasing short positions in the derivatives market too, which reflect a bearish outlook. Elevated valuations in India and cheaper valuations in other markets will continue to influence FII activity," added Vijayakumar.

Muted corporate earnings

The tepid start to the corporate earnings season further dampened market sentiment, as several key companies, including Axis Bank, Tech Mahindra, HCL Tech, and TCS posted subdued financial results for the June quarter. The lacklustre performance from these index heavyweights added to investor caution, triggering broader market weakness.

“Global uncertainty and a muted start to the earnings season are weighing on investor sentiment. However, sustained liquidity inflows are helping to cushion the downside. This is clearly evident in the current market environment, where a divergent trend is visible—while the benchmark index is under pressure, mainly due to weakness in heavyweight IT stocks, said Ajit Mishra – SVP, Research, Religare Broking.

At the same time, rate-sensitive sectors like auto, realty, and select banking, along with continued interest in defensives like FMCG and pharma, are not only limiting the losses but also offering ample long-side trading opportunities, he added.

Uncertainty over India-U.S. trade deal

The persistent uncertainty surrounding the India-U.S. trade deal has also contributed to market unease, as investors remain cautious amid the lack of clarity on key terms and timelines. The delay in finalising the agreement is seen as a potential overhang on export-driven sectors and overall investor sentiment.

Earlier this week, U.S. President Trump indicated that a deal with India was nearing completion. President Trump’s recent remarks come amid an ongoing visit by a delegation from India’s Commerce Ministry to the U.S. for renewed trade talks. Earlier this month, Commerce Minister Piyush Goyal stated that India does not pursue trade agreements based on fixed timelines, highlighting a measured and strategic approach to negotiations.

Global Uncertainty

Heightened global macroeconomic risks, including concerns over U.S. interest rates and China’s slowdown, weighed on risk appetite across emerging markets.

Share markets in the Asia-Pacific region were trading mostly higher on Friday, tracking overnight gains in U.S. stocks following strong economic data that eased concerns about the world’s largest economy. Investor sentiment was further supported after U.S. President Donald Trump denied reports of plans to remove Federal Reserve Chair Jerome Powell, alleviating worries about the potential implications for central bank independence and future monetary policy.

Technical breakdown

Technically, after a quiet opening, the market is continuously facing selling pressure at higher levels. The Nifty and Sensex have formed a bearish candle on the daily chart and a lower top formation on the intraday chart, indicating a largely negative trend.

“We believe that as long as the market is trading below 25,255/82,700, the weak sentiment is likely to continue. On the downside, the 50-day SMA (Simple Moving Average) at 25,000/82,000 would be the immediate support level. Below 25,000/82,000, a move towards 24,900-24,850/81,600-81,500 would increase the chances,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.

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